John Grant is a former Capitol Hill reporter and federal lobbyist. As a reporter, John covered financial services issues before Congress and regulatory agencies. As a lobbyist, John represented as array of industries including banking, real estate and a number of trade associations. John helped shape public policy, engaged in media campaigns to educate the public about his clients, and conducted extensive research for hedge funds.
Beyond writing three published articles per week as a reporter, John wrote blog posts, press releases, white papers, extensive research documents, and editorials published in The Wall Street Journal, The Washington Post, The Hill, Roll Call and other influential print and online publications.
John currently works as a freelance writer and manages his own real estate investments.
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A Guide to Eliminating Private Mortgage Insurance
If you are looking for ways to reduce your mortgage payment, dropping private mortgage insurance may be an easy solution. PMI, which protects lenders from default, is generally required for all conventional loans with a down payment of less than 20%. While PMI may be canceled, mortgage insurance premiums charged by the Federal Housing Administration and Department of Veterans Affairs mortgage funding fees are not eligible for early cancellation, and neither is lender-paid mortgage insurance.
Here are your options to eliminate PMI:
By law, lenders must cancel PMI once a loan reaches 78% loan-to-value. To calculate LTV, divide the balance of your loan by the purchase price. To estimate when your loan will hit 78% LTV, use a mortgage amortization calculator. PMI also terminates when your mortgage hits the halfway point as long as you are current on payments, so if your loan has an interest-only period or balloon payment this may provide faster relief.
Requesting early cancellation provides an opportunity to save even more money. Many borrowers get confused during this process because there are different rules for original value (the loan amount) and current value (based on new appraisal). If your mortgage hits 75% LTV in two to five years using current value, or 80% LTV after five years using original value, you can write your lender or servicer to request PMI cancellation.
To qualify for early cancellation, you must: submit a request in writing; have a strong payment history; no liens; and an appraisal or broker price opinion confirming the value of the property.
If your request to cancel PMI is denied, consider the following steps: