Question:

How to get rid of PMI (private mortgage insurance)?

Answer:

How to get rid of PMI (private mortgage insurance) is particularly useful to know if you are a good credit, disciplined borrower. According to a law enacted in July 1999, good borrowers with no late payments can require that lenders cancel their PMI (private mortgage insurance) when their equity reaches 20%.

Equity can be built either through house appreciation, or through making regular mortgage payments. To initiate PMI cancellation when you suspect you have enough equity, you may be required to pay for house appraisal so that your equity will be established correctly. However, lenders are required to drop the PMI payment automatically when borrowers are current on their mortgage and equity has reached 22-23%.

Nevertheless, if you have agreed to a higher interest rate to avoid PMI payments, you can't get rid of private mortgage insurance. The way out will be refinancing.

Also, if you are taking a subprime loan, you can't get rid of PMI (private mortgage insurance) carried until amortization midpoint is reached.

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