Question

Explain the purpose of Private Mortgage Insurance (PMI) and when can it be eliminated by the homeowner's request to a lender?

Answer 1

Ans:- PMI or Private Mortgage Insurance is a kind of debt insurance . A person might be compulsory to pay the PMI if that person have a conventional (non- governmental) mortgage. PMI is like other mortgage insurance it protect the money lenders interest when the person breaking the payment amount. The Private Mortgage Insurance arranged by the Money lender (providing private insurance company). The PMI is required when refinancing by a conventional mortgage and equity is less than 20% of the actual value of the home. The way of payment is monthly payment it is added to mortgage payment.

The legal system provide many rights to eliminate or remove PMI under certain situations. Mainly two ways to remove PMI.

1. Demanding or requisting private mortgage insurance cancellation :- A person has the right to request the lender to cancel PMI. When reached the said date the basic balance of the loan is planned to fall 80% of the real value of the home.

2. The Final or Automatic PMI termination:- It is automatically terminated after the prescribed conditions are fulfilled.