1 of 1

Write now Article Tools

Page 2 of 2

likely to be. Comparing loan-to-value interest rate tables from different lenders can be quite an eye-opener. A difference of one-quarter to one-half percent interest on a sizable mortgage loan can make significant difference in the monthly mortgage payment amount once the cost of mortgage insurance is added in.

The amount of money borrowed from the lender compared to the appraised value of the property is the loan-to-value ratio. Property values will change over time as market conditions dictate. In some areas, especially high population growth metropolitan areas, property values are falling, while is others they have remained relatively unchanged. Home buyers should pay attention to the value of their home as the principle is slowly paid down and property values follow area trends. In a situation where the loan-to-value, or LTV, amount of a mortgage falls to less than 80%, PMI is no longer required. In this situation, the borrower should contact the lender and request termination of the PMI.

Homebuyers with outstanding credit rating and low debt-to-income ratios should work closely with their mortgage lender in determining the need for PMI. In some cases, lenders are willing to accept full payment of PMI upfront when granting the mortgage.

If Private Mortgage Insurance is cancelled, the amount of monthly mortgage payments is reduced accordingly. Note that lenders may require that borrowers pay for an updated property appraisal in order to justify the cancellation of PMI. Homeowners with PMI attached to their mortgage loan would do well to pay attention to the value of their home relative to real estate market trends in their respective area.

Learn more about this author, Francis Jock.
Click here to send this author comments or questions.

• << previous page
• 1
• 2

Add your voice

Know something about Guide to single-family home mortgage insurance?
We want to hear your view. Write now!