Eliminate Your PMI

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What is Private Mortgage Insurance?

Private Mortgage Insurance is an insurance policy that is required for all loans over 80% Loan to Value. It is paid for by the borrower as a part of the monthly mortgage payment. This policy insures the lender against a default by the borrower. In the event of a default by you, the lender is the beneficiary. There is no benefit due to you, the borrower. Private Mortgage Insurance is insurance required by mortgage lenders for their benefit, not yours. This is an expense charged to you as a borrower but is for the sole benefit of the lender.

Why should I pay for Private Mortgage Insurance?

You shouldn’t, if you don’t have to. It is an unnecessary expense that has no value to you.

Private Mortgage Insurance allows borrowers to acquire 90% and 95% LOANS. The only way mortgage lenders will provide these high loan to value ratios is, if they are insured against a loss that may occur, should the borrower default on the loan. If you originally secured a 90% or 95% loan, a premium for mortgage insurance is included in your mortgage payment.

As soon as your property value exceeds the required 80% loan to value ratio, you are no longer required to make this premium payment. Example: Say you paid $100,000 for your home and secured a 95% loan (borrowed $95,000). It is possible that due to the recent improvement in Houston property values that your home is now worth $120,000. If that is the case, you no longer are required to pay mortgage insurance. Remember that mortgage insurance is an expense charged to you, but you are not the beneficiary. The lender is. As soon as you can eliminate this payment, you should.

How do I get rid of this premium?

You need to contact your mortgage lender and tell them you would like to have your mortgage insurance removed. They will tell you what you need to do. Generally speaking, you will need a current real estate appraisal (that’s where we come in). While you have them on the phone, get your current loan balance. Call us and we will see if removing your mortgage insurance looks feasible.

To create a letter to send to your mortgage company requesting PMI removal, complete the form on the right side of this page. Once you process the form and create your letter, simply select your print button on your browser. Then select your back button on your browser to return to this page.

Note: Brubaker and Associates does not capture any of the following information your enter into the form to the right.


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Mike Brubaker