Things You Should Know about Private Mortgage Insurance
Private Mortgage Insurance (or PMI) is a good option if you cannot make a 20% down payment on a new house or a property. PMI protects banks or lenders in the case that you are not able to make your mortgage or loan payments. But before you choose to go for PMI instead of other options, you should understand a few things about it. Here are some of the most important things you need to know about Private Mortgage Insurance. * Your Private Mortgage Insurance rate or premium depends on three important things: your credit history; your loan amount; and the value of the house or property you want to buy. * If you are already paying monthly for PMI, you can cancel it using two ways. One is to request cancellation as soon as your mortgage payments reach 80% of the property's actual cost. Second is when the lender cancels your PMI as soon as your equity reaches 20%. * Even if you put a down payment on the property you want to buy but it falls below 20% of the total value, then you are required to get Private Mortgage Insurance. * You can also stop paying for PMI if your property's value has appreciated. This can happen if you renovate or add new structures to your house. A property can also appreciate if the area where it is located suddenly becomes a booming city or neighbourhood (e.g. if businesses pick up, more people move to the area). Private Mortgage Insurance helps lenders and banks, but it can help you, too. If you don't have enough cash to pay a 20% down payment on a property you want to buy, try to learn more about PMI and its benefits.