default avatar
Welcome to the site! Login or Signup below.
Logout|My Dashboard

Is it Time to Cancel Your Mortgage Insurance?

Font Size:
Default font size
Larger font size

Posted: Sunday, December 29, 2013 10:00 pm | Updated: 1:32 am, Wed Jan 1, 2014.

(Family Features)  Mortgage insurance is a policy lenders may require you to buy when you take out a home loan. This policy will protect them should you default on payments. Although you must pay the premiums, the insurance policy offers you no protections. If the house were to go into foreclosure, only the lender's interest in the property would be addressed.

Anyone making a down payment of less than 20 percent of the appraised value or sale price of a house is required to purchase mortgage insurance. Several companies underwrite private mortgage insurance, known as PMI. The main government mortgage insurer is the Federal Housing Administration.

Most people aren't even aware how much this insurance premium costs them each month. Consider one couple who made a 10 percent down payment on a $200,000 house. They were required to purchase mortgage insurance on the $180,000 borrowed and were charged an annual premium of 0.50 percent. The insurer multiplies the loan amount by 0.005, for an annual premium of $900.00. That works out to a monthly payment of $75.00.

It's important to keep track of your loan balance and home value. Once you reach the point where the loan-to-value ratio hits 80 percent, ask your lender to discontinue the PMI premiums. Federal law requires lenders to tell the buyer at closing how many years and months it will take for them to reach that 80 percent level and cancel PMI. But fluctuations in home values or making extra payments may mean you hit this point sooner than expected. Lenders must automatically cancel PMI when the balance hits 78 percent.

Talk to several mortgage lenders when shopping for a home loan. They will be able to educate you on mortgage insurance and explain potential tax savings. Lenders may also offer suggestions on how to avoid PMI payments altogether.

Rules of Conduct

  • 1 Use your real name. You must register with your full first and last name before you can comment. (And don't pretend you're someone else.)
  • 2 Keep it clean. Please avoid obscene, vulgar, lewd, racist or sexually oriented language.
  • 3 Don't threaten. Threats of harming another person will not be tolerated.
  • 4 Be truthful. Don't lie about anyone or anything. Don't post unsubstantiated allegations, rumors or gossip that could harm the reputation of a person, company or organization.
  • 5 Be nice. No racism, sexism or any sort of -ism that is degrading to another person.
  • 6 Stay on topic. Make sure your comments are about the story. Don't insult each other.
  • 7 Tell us if the discussion is getting out of hand. Use the 'Report' link on each comment to let us know of abusive posts.
  • 8 Share what you know, and ask about what you don't.

Welcome to the discussion.


Should graduations return to the Grape Bowl?

Lodi Unified leaders are moving Lodi and Tokay high school graduations from the Grape Bowl to the Spanos Center at UOP in Stockton. They cite limited seating, costs and unpredictable weather at the Grape Bowl. But others say graduations at the Grape Bowl are an important Lodi tradition, and one reason many supported renovating the stadium. What do you think?

Total Votes: 100


Mailing List

Subscribe to a mailing list to have daily news sent directly to your inbox.

  • Breaking News

    Would you like to receive breaking news alerts? Sign up now!

  • News Updates

    Would you like to receive our daily news headlines? Sign up now!

  • Sports Updates

    Would you like to receive our daily sports headlines? Sign up now!

Manage Your Lists