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What is PMI
and how to get rid of it
Mortgage lenders are very wary of
lending more than 80% of the home’s
value.. This provides
the lender a cushion. However, it
has become common to see home buyers
using down payments of 10% or 5%. Of
course, loaning this much leaves the
lenders with more risk. To counter
this risk, the lenders require
Private Mortgage Insurance or PMI.
This supplemental policy protects
the lender in case a borrower
defaults on the loan. PMI is large
money-maker for these mortgage
lenders. The cost of this insurance,
often $80-$100 /month for a $200,000
house, is included in the mortgage
payment.
Homeowners continue to pay the PMI
even after their loan balance has
dropped below the
original 80% threshold. Often the
homeowner's equity can quickly reach
beyond the 20% of the balance, due
to the gains in real estate values.
We determine the value of the homes
and we offer the data to remove the
PMI payments. |
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