P.M.I. doesn't mean "Protect My Interest"

April 6th, 2016 | P.M.I.

What is PMI?

P.M.I. (Private Mortgage Insurance) doesn't mean "Protect My Interest"

Overview by Robert T. Lord


If you put less than 20% as a down payment on a mortgage, you may be required to have Private Mortgage Insurance (P.M.I.) or its equivalent on other loan products. PMI protects the lender if you default on the mortgage. The Homeowners Protection Act of 1998- which became effective in 1999- establishes rules for automatic termination and borrower cancellation of PMI on home mortgages. Currently, these protections apply to certain home mortgages signed on or after July 29, 1999 for the conventional purchase or refinance of a single-family home. These protections do not apply to government-insured FHA or VA loans.

For conventional home mortgages signed on or after July 29, 1999, your PMI must be terminated automatically when you reach 22 percent equity in your home based on the original property value, if your mortgage payments are current. Your PMI also can be canceled, when you request it in writing, when 20% equity in your home occurs, based on the original property value. This option also requires that your mortgage payments are current.

One exception in the termination of your PMI is if your loan is "high risk". A further exception is if you have not been current on your payments within the year prior to the time for termination or cancellation request. A third exception is if you have incurred additional liens on your property. When these exceptions apply, your PMI may continue.

Keep in mind that even if your mortgage did close before July 29, 1999, you can ask to have the PMI canceled once you exceed 20% equity in your home.

Remember that PMI is actually your friend, and gives you advantages on your mortgage and, among other advantages, allows lower downpayments on a purchase!

Check out our The Learning Center for more even more PMI information at http://www.1stophomeloans.com/private-mortgage-insurance/ or give us a call at (901) 388-1588 and we're more than happy to explain PMI's advantage to you further!



Serving the Great Mid-South Region
Offices: 901-388-1588 or 901-476-9100 |
Fax: 901-388-6202 | Email: info@1stophomeloans.com
1 STOP MORTGAGE | NMLS#215671 | TN Lic#108931 | 5909 Shelby Oaks Dr, Suite 129, Memphis, Tennessee 38134