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If you purchased your home and borrowed more than 80% of its value initially, chances are you are paying a stiff amount of PMI each month. Anyone with PMI eventually reaches the point where they are permitted to have it removed from their loan, but the key is in asking. Here is a quick step by step to knowing when you can remove your PMI and getting it taken care of.
First, keep your eye on other homes in your area. Increased home values can help you steam towards the necessary 20% equity that you will need to remove your PMI. Once you see that the hoes in your area have appreciated a good amount, look into getting an appraisal done to determine the present value of your home. If you find that the home is now worth enough to give you the needed equity, you can move on to your lender.
Contact your lender and let them know that you would like to submit a new appraisal for the value of your home. They will typically want to order their own appraisal unless you are working with a mortgage broker. Once they get the appraisal, they will do their own calculations to determine your equity. The key is in hounding them. Lenders typically will not rush these things unless you tell them to. Once they get the numbers, you should have no problem asking them to take the PMI off of your loan and you will be free from it.
|Jennifer Mathes, Ph.D.|