Mortgage PMI in New Jersey, Mortgage PMI is?

Private Mortgage Insurance Fact Sheet

Do I need Private Mortgage Insurance? Mortgage insurance protects mortgage lenders from losing
money when a home buyer defaults on a mortgage loan. Private Mortgage Insurance (PMI) is the
insurance you pay for when you take out a conventional loan. Most lenders require PMI if your
downpayment is less than 20 percent of the purchase price of your home. PMI does not apply to
loans offered by the Federal Housing Administration (FHA) or the Veterans' Administration.

When and How to Drop Private Mortgage Insurance

Generally, you can be released of your obligation to pay PMI once it is certain you have at least 20
percent equity in your home and you live in the home; you have a satisfactory payment history;
and, the mortgage is at least two years old. You must ask to cancel PMI in writing.

How to FigureYour Equity

Take your unpaid principal balance, divide it by the current appraised market value of your home,
and this equals your loan-to-value ratio. Subtract this number from 100 to determine your equity
percentage. For example, if you have $79,000 yet to pay in principal, and your home is appraised
at $100,000, you have a 79 percent loan-to-value ratio, and 21 percent equity in the home. In this
example, the homeowner would be eligible to cancel PMI.

Appraisal Required

An appraisal can be required to determine the fair market value of your home, and if you have at
least 20 percent equity based on that value. The appraisal must be done by an appraiser approved
by your lender, and you will be responsible to pay for the appraisal.

Payment History

Your payment history can affect your ability to cancel PMI. With respect to the monthly payments
of principle, interest, taxes and homeowners hazard insurance, you may only have one
delinquency of 16 to 29 days during the last 12 months. You may only have one delinquency of 30
to 59 days in the 12 months preceding the most recent 12 months.