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An easy way to help your buyers save money

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09/15/2015 | Author: Editorial Staff

Private mortgage insurance, or PMI, is usually required when homebuyers have a downpayment less than 20% of the sales price or appraised value of a property. But homeowners who pay extra toward their principal may not realize they could be eligible to terminate their mortgage insurance earlier than they think. Let your buyers know they can request to cancel their coverage if they meet certain requirements, including:

  • The principal balance of the mortgage reached 80% of the original value of the home
  • A good payment history
  • Current on the loan

Note that even if homeowners meet these and other requirements outlined in the act, they should also review the terms of their policy, which may have conditions related to cancelation. In addition, Federal Housing Administration loan borrowers must pay PMI for as long as they have the loan.

Lenders are legally required to automatically terminate mortgage insurance when the principal balance of the loan reaches 78% of the original value of the property. However, lenders sometimes inadvertently collect money after the termination date, so it’s important for homeowners stay aware of their payment progress even if they aren’t trying to speed up the process.

Make sure your clients know actions they can take to terminate their private mortgage insurance. Get more information from the Consumer Financial Protection Bureau’s recently released compliance bulletin.

Categories: Business tips, Homeowners
Tags: homeowners, buyers, private mortgage insurance, cfpb

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Legal disclaimer

The material provided here is for informational purposes only and is not intended and should not be considered as legal advice for your particular matter. You should contact your attorney to obtain advice with respect to any particular issue or problem. Applicability of the legal principles discussed in this material may differ substantially in individual situations.

While the Texas Association of REALTORS® has used reasonable efforts in collecting and preparing materials included here, due to the rapidly changing nature of the real estate marketplace and the law, and our reliance on information provided by outside sources, the Texas Association of REALTORS® makes no representation, warranty, or guarantee of the accuracy or reliability of any information provided here or elsewhere on texasrealestate.com. Any legal or other information found here, on texasrealestate.com, or at other sites to which we link, should be verified before it is relied upon.

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