How Louisiana Homeowners Can Get Rid Of PMI

Private mortgage insurance in Louisiana is a type of policy which solely protects the lenders from any possibility that the buyer might go on default or mortgages that might be subjected to foreclosure. It allows the buyer to make a down payment of less than 20 percent but still be able to acquire house loan financing at reasonable rates. So if you can only put down less than 20 percent, the mortgage company may require you to purchase an insurance from one of the PMI companies in states like Louisiana before you close the deal.

Since PMI’s sole beneficiary are the lenders, it adds a hefty amount to your monthly mortgage payment. PMI usually costs from 0.5 percent to 1 percent of the yearly loanable amount, which192 can cost up to $2,300 per year or $192 per month, given that it’s a 1 percent PMI rate.

Private mortgage insurance is completely different from mortgage life insurance. Mortgage life insurance protects your beneficiaries if in case you become disable or upon your death.

Since the PMI policy solely benefits the lender, aside from the fact that it’s expensive, it is important that you know when and how you can get rid of your PMI.

Automatic Termination

Based on the Homeowners Protection Act, your lender should terminate your PMI on the date that your mortgage balance is projected to reach 78 percent of the house’s original value, given that you are not behind on your house loan payments. If in case you are behind with your payment on the date that you are supposed to reach the threshold of 78 percent, the lender will have it adjusted and terminate the private mortgage insurance on the very first day of the month when you become current with your mortgage. The lender can no longer require the buyer to push through with the PMI payments for more than thirty days upon the termination date.

Cancellation Request of the Borrower

In accordance with the law, borrowers in cities like New Orleans who have good payment histories may file a request for the PMI to be cancelled as soon as their equity reaches 20 percent of the appraised value or actual house price. Make sure that you do pay your bills on time so that you can file a request to have the PMI canceled.

Refinancing

Refinancing is a good option to cancel your PMI. However, you have to make sure that this would help you financially. Remember that refinancing the house would be like extending your mortgage by getting a different loan. This may only prolong your mortgage payments. Asking assistance from real estate agents in Louisiana is very much advisable. Ask them for other options that can help you with refinancing.