Note on Private Mortgage Insurance: When Can You Cancel It?
We recently went over various ways in which borrowers can fund a down payment. Here’s a related topic:
PMI is extra insurance a lender may require you to buy if you’re forking over less than 20% of a property’s value as that down payment. It’s necessary because owners who put down small amounts are more likely to default on a Florida home loan.
Remember: If you opt for mortgage insurance, once you earn 20% equity in your home, you should be able to cancel the insurance.
An important thing to understand about PMI is that the 20% equity threshold relates to your home’s value, not necessarily 20% of the Florida mortgage amount. If you get a great deal and buy your residence below market value, buy a fixer-upper and fix it up to increase its value, or pick a locale that suddenly becomes popular and rapidly appreciates in value, your mortgage amount might be very different from the value of your house.
In the end: If you’re required to pay for PMI, keep tabs on the changing value of your home. Compare this to the balance remaining on your Florida home mortgage and see where thingd stand.
