Private mortgage insurance (PMI) is insurance against the non-payment or default of an individual mortgage or loan involved in a residential mortgage transaction. It protects a lender against loss if a borrower stops making mortgage payments. It also makes it possible for you to buy a home with as little as a 3-5 percent down payment. In most cases, a borrower who makes less than a 20 percent down payment must buy PMI until the loan is paid down to 80 percent of the purchase price. After this, Divorce Home Appraisals can work on your behalf to have your PMI dropped.

Under the Homeowner’s Protection Act (HPA) of 1998, you have the right to request cancellation of PMI when you pay your mortgage down to the point that it equals 80 percent of the original purchase price or the appraised value of your home at the time the loan was obtained, whichever is less.

You also need a good payment history, meaning that you have not been 30 days late with your mortgage payment within a year of your request, or 60 days late within two years. Your lender may require evidence that the value of the property has not declined below its original value and that the property does not have a second mortgage, such as a home equity loan.

For high risk loans, mortgage lenders are required to automatically cancel PMI coverage once the mortgage is paid down to 77 percent of the original value of the property, provided you are current on your loan. PMI can be pricey to a borrower on the grounds that the $40-$50 a month per $100,000 borrowed is rolled into the mortgage monthly payment and oftentimes isn’t even tax deductible. It’s profitable for the lender because they obtain the money, and they get paid if the borrower defaults, unlike a piggyback loan where the lender absorbs all the costs.

The savings from cancelling the PMI required when you got your mortgage will make up for the cost of the appraisal in no time. Most homeowners don’t realize how much money Divorce Home Appraisals can help save on their mortgage payments each month because of PMI removal.

​As a trusted Georgia home appraiser since 2001, Divorce Home Appraisals will provide you with the service, details, and speedy home appraisal reports many of our customers have come to expect. We are here to help you. Contact us today for your complimentary consultation.