Let Olympic Valuation help you discover if you can cancel your PMI

A 20% down payment is typically required when purchasing a house, providing a buffer against foreclosure charges, resale expenses, and market fluctuations if a borrower defaults.

During the peak of the last decade's mortgage boom, the market accepted down payments as low as 10%, 5%, and even 0%. To manage the increased risk of low down payments, lenders turned to Private Mortgage Insurance (PMI). This safeguard shields the lender if a borrower defaults and the home value is less than the loan balance.

However, PMI can be costly for borrowers—around $40-$50 per month per $100,000 borrowed—added to the monthly mortgage payment and often not tax-deductible. Lenders benefit by collecting these funds and being protected in case of borrower default

How can a home buyer prevent bearing the cost of PMI?

The Homeowners Protection Act of 1998 mandates lenders to automatically terminate PMI when the loan's principal balance reaches 78% of the initial amount, but homeowners can request its removal earlier, at 80%. Understanding your property's appreciation is key since it contributes to PMI removal. Why pay when your balance is below 80%? Local trends might differ, and your equity could have grown despite national declines.

Recognizing the 20% equity threshold is challenging. You can rely on a Certified Appraiser from Olympic Valuation. We're experts at recognizing value trends in Port Angeles, Clallam County and surrounding areas. When presented with an appraisal from a Certified Appraiser, the mortgage company will usually eliminate the PMI with little trouble.

Want to learn more about PMI and the Homeowners Protection Act? Click this link:
Cancellation of Private Mortgage Insurance: Federal Law May Save You Hundreds of Dollars Each Year