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What is PMI and Why Am I Paying It?

When a borrower makes a down payment that is less than 20% of the property's value, the mortgage's loan-to-value (LTV) ratio is over 80%, which makes it mandatory that the borrower pay for Private Mortgage Insurance (PMI). PMI protects the lender—not you—if you stop making payments on the loan.

PMI costs can range from 0.25% to 2% of the loan balance per year, depending on the size of the down payment and mortgage, the loan term, and the borrower's credit score. The greater your risk factors, the higher the rate you'll pay.

 

Good news for PHH borrowers

  • PHH is required to automatically terminate PMI on the date your principal balance is scheduled to reach 78% of the property’s original value. 
  • If you are current on payments, PHH must end the PMI the month after your loan reaches the midpoint of your loan’s term.

Ways to remove PMI

  1. PMI can be removed during a refinance if your mortgage is scheduled to fall to 80% of the original value of your home.
  2. If your home’s value has increased, you may be able to provide a new appraisal showing you now meet the LTV requirement.

If you are interested in refinancing or you think your home has increased in value, reach out to a PHH Loan Officer today to see if your PMI can be removed! Call (800) 792-6033 or fill out a short form at phhsavings.com