Freedom from debt is something everyone looks out for. But what happens when your private mortgage insurance just grows and grows without rhyme or reason? That is the point when you decide to get rid of it.
What is PMI Debt? These debts are actually arrears that you may get from buying a piece of real estate. If you pay a sum for your new house which is less than 20% below the asking price of the seller, then you end up paying a PMI. It is a kind of insurance to protect the mortgagor from losses incurred in case you are not able to pay up for the house.
Why You Should Get Rid of PMI. PMI is like a one-sided loan, and protects the lender alone. Where are your long-term benefits here? Instead you have to pay up for what seems like forever. PMI can actually pile up to go high and put a strain on your accounts. So, to get rid of it here’s what you do.
Pay in Full. Pay up by saving as much money to cover the down payment, and if possible pay a bit more to avoid paying it altogether. Otherwise you are looking at paying it for around 10-15 years.
PMI is a High-Priority Debt. Remember, PMI is a high-priority debt, and it would make you adjust your finances and cut costs. So before you take your next vacation, remember to clear out the PMI.
Talk to Reputable Lenders. Talk to someone who is a good, well-established lender and ask for his advice. Dishonest lenders can actually defraud you and further your financial problems. Also, talk to your lawyer or accountant before agreeing to PMI as well.
How to Cancel PMI Debt. You can cancel your PMI debt, and what you can do is read through the lending group’s policies on cancellation and such procedure. There are policies by the government, like “Homeowner’s Protection Act” in USA, where some generic rules of cancellation are given. Also, a list of ways to get your PMI cancelled is presented here:
Let your lender know about your wish to cancel PMI.
Go for a good set of appraisal service and get the required appraisal done.
Calculate your loan to value ratio.
If you satisfy the generic criteria then you are good to go.
Legal Action. Sometimes, fraudulent lenders will not cancel the PMI, though you have satisfied the cancellation requirements. In that case you should write a polite but firm letter stating the proof and fact that you have satisfied the required criteria and would like to see the PMI cancelled, and requesting immediate actions. Then if the lender disputes, you can go to the court that would help you get your money back. Getting rid of the PMI is a good way to take back your life and secure it financially and get your money safe so that that is not spent without any rhyme or reason.