Get Rid Of Mortgage Insurance!

by Kate Ross - Date: 2007-01-06 - Word Count: 472 Share This!

Mortgage insurance can cost thousands of dollars over the whole life of the loan. In many cases people agree to get insurance with the company associated with the lender that may abuse this situation overcharging customers. You should know that you have rights on this matter and that the lender cannot decide which company you work with.

Private Mortgage Insurance

Private Mortgage Insurance (PMI) is compulsory when your mortgage loan exceeds 80% of the property's value. The idea is that if anything happens to you and you can't meet the monthly payments, the property is ruined, burned or reduces its value for other reasons, the insurer will compensate the lender for his loses.

PMI grants the lender an extra assurance for repayment in case something unexpected happens that is beyond the control of the lender, the borrower and the legal system. This reduces the risk for the lender but increases the cost for the borrower. Thus, it is only required when the loan exceeds a certain amount of the value of the property.

Conditions For PMI Elimination

Thus, the condition for PMI elimination is that the debt to value ratio is reduced below 80%. This can be achieved with the accumulation of the monthly payments that reduce the debt secured by the mortgage or by a raise on the value of the property that also alters the debt to value ratio lowering it.

Nevertheless, you need to read the loan contract thoroughly in order to understand if there are additional requirements and you also need to analyze the offers provided by other lenders and by your current mortgage lender to see which percentage is currently being required to waive the PMI requirement.

Method For PMI Elimination

In order to get rid of PMI, you'll need to refinance your home loan. There is always the option to request your current lender to consider eliminating PMI from your outstanding mortgage but, that would also be a form of home loan refinancing since the terms of the loan would be altered.

Truth is that by refinancing with other lenders you have more chances of getting a better deal. Your current lender is already earning money at your expenses and chances are that he won't be open to negotiations. Other lenders, on the other hand, will be fighting to have you as a new client and will present you with different loan options.

Provided that you get a low debt to value ratio, the possibilities to get a home mortgage loan without PMI are on your side. Just get in touch with various lenders and request loan quotes from them letting them know that you seek a non PMI home mortgage loan and that you are consulting with several lenders. Don't miss the opportunity to bargain a little on the interest rate too, you may save thousands of dollars by doing so too.

Related Tags: private mortgage insurance, rid of mortgage insurance, mortgage installment, pmi elimination


Kate Ross is a professional consultant with fifteen years in the financial field. She helps people in the process of securing personal loans, mortgage, refinance or consolidation loans and prevents consumers from falling into financial scams. Smart tips and interesting articles on this subject and other financial related topics can be found at

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