An easy way to help your buyers save money
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.
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