Recently Palm State Mortgage has been getting a lot of questions about PMI or Private Mortgage Insurance. If you can not give your lender a 20 percent down payment, you will have to pay Private Mortgage Insurance payments.
Today we bring you 6 Keys to Understanding PMI. As its name suggests, this payment, which can be tacked onto your mortgage monthly payment, insures that the lender will be paid if you can not make payments.
Everybody’s first question is “When can I remove private mortgage insurance (PMI) from my loan?” Understandably, most homeowners look forward to this because removing the PMI payment will reduce monthly house payments.
There are some requirements you must meet:
1. The Key To PMI Cancellation Key :
How To Request PMI Cancellation
The Home Owner’s Protection Act is the law that gives you the right to request that your lender cancel PMI when you have reached the date when the principal balance of your mortgage is scheduled to fall to 80 percent of the original value of your home.” Check your files, because this date should have come to you on a PMI disclosure form when you received your mortgage. This is the first financial key to understanding your PMI rights and responsibilities.
If you can’t find the disclosure form, Palm State Mortgage advises you to contact your lender.
2. The Key To Your Request for cancelling PMI:
Be Paid Up to Date When You Ask the lender to cancel the PMI. 
As you would imagine, in order to remove private mortgage insurance (PMI) that you pay on your mortgage loan, you must be up to date with your monthly payments. (By the way, the rules we are referencing , apply to mortgages closed on or after July 29, 1999.)
3. PMI and the Extra Payment Key:
If you have made additional payments to reduce the principal balance of your mortgage to 80 percent of the original value of your home, you can make this request earlier than the date on the official PMI disclosure form.
4. Put It In Writing: The Formality Key
- You must put your request to cancel PMI in writing.
- Check your records because you must have good payment history. In other words you have given your lender no cause to worry that your might default on the loan. Careful and consistent payment of your loan debt each month is the best way to reassure your lender!
5. The Second Mortgage Key:
Your lender is within his rights to ask you to certify there are “no junior liens (such as a second mortgage) on your home.”
6. The Appraisal Key:
Your lender also might require you to provide an appraisal that proves your property has not declined since you first bought the home. You might be in trouble if you have broken out all the windows, knocked jagged holes in the walls, removed all the appliances and burned up all the landscaping. You should know that if “the value of your home has decreased, you may not be able to cancel PMI.”
If everything is in order with these six keys, you can request cancellation of PMI. Your monthly loan payment will go down a bit, and you will have a little more money in your 
budget.
Automatic PMI termination
Did you know that even if you didn’t request your lender to cancel PMI, your lender has an obligation to terminate PMI when your principal balance sinks to 78 percent of the original value of your home?
This works only if you are current on your payments, of course. PMI won’t be legally terminated until you are up to date with your mortgage payments. .
Final PMI Termination
Another important key to the requirements for ending your PMI payments is that your lender must terminate PMI, “if you reach the midpoint of your loan’s amortization schedule before the 78 percent date.”
In most cases, the midpoint of your loan’s amortization schedule is halfway through the life of your loan. Since most loans are 30-year loans, the midpoint would typically occur at the end of the 15 year mark.
Exceptions for some of these rules might include people who have attained an interest-only period for their home loan. Likewise a balloon payment could mess up the formula.
Special Notes: These rules do not typically apply to loans guaranteed by the Federal Housing Administration (FHA)
If you have questions about mortgage insurance on an FHA or VA loan, contact your servicer.
Of course, if you have lender-paid mortgage insurance, altogether different rules will apply, and your monthly payments will be lower.
