Private mortgage insurance (PMI) protects the lender if you stop making mortgage payments, but you are responsible for the cost. Once you have built enough equity in your home, you may be able to request a PMI removal appraisal from S. Keenan, INC in Elgin, IL. But how much could you actually save by removing PMI? Let us take a closer look.
What Does PMI Actually Cost You?
PMI typically costs between 0.3 percent and 1.5 percent of your original loan amount each year. On a three hundred thousand dollar loan, that works out to about ninety dollars to three hundred seventy-five dollars per month. Over a year, that adds up to over one thousand dollars. Over five years, you are looking at five thousand dollars or more.
That is real money. Money that could be going into your savings account. Money that could be paying down your principal faster. Money that could be used for anything else besides insurance you do not really need anymore.
A Real Example
Let us say you bought a home for three hundred thousand dollars. You put down ten percent, so your loan is two hundred seventy thousand. You are paying PMI at 0.8 percent of the loan amount. That comes to about one hundred eighty dollars per month. Over a year, that is over two thousand dollars.
Now your home has appreciated. Maybe you have made some improvements. Your home is now worth three hundred fifty thousand. Your loan balance has come down to two hundred fifty thousand. Your loan-to-value ratio is about seventy-one percent. Well below the eighty percent threshold.
You get a PMI removal appraisal from S. Keenan, INC. The appraiser confirms the value. You submit the paperwork to your lender. PMI comes off. You just saved one hundred eighty dollars every single month. That is over two thousand dollars a year. And that keeps going for as long as you own the home.
How Much Could You Save Over Time?
Let us say you have twenty years left on your mortgage. That one hundred eighty dollars per month adds up to over forty-three thousand dollars over that time. And that is just one example. If your PMI payment is higher, your savings are even bigger.
Think about it. That is money you could use for renovations. Money you could invest. Money you could put toward your kids’ college fund. Money you could use for anything else.
What Is the Eighty Percent Rule?
This is the magic number. To remove PMI through a request based on appreciation, you typically need your loan-to-value ratio at or below eighty percent. That means your loan balance is eighty percent or less of what your home is worth.
S. Keenan, INC. does a PMI removal appraisal to see where you stand. If the number comes in high enough, you qualify. You submit the appraisal to your lender. You request the PMI removal. And the savings start.
Automatic PMI Removal vs. Requested Removal
There are two ways PMI comes off. Automatic removal happens when your loan balance hits seventy-eight percent of the original purchase price. The lender has to cancel it by law. That happens based on the original value and your regular payments. Requested removal is what we are talking about here. You ask to remove PMI early because your home has appreciated. That requires a current appraisal from S. Keenan, INC. to prove you have the equity.
What You Need for a PMI Removal Appraisal
First, make sure you have owned the home long enough. Some lenders require at least two years before they will approve a PMI removal request. Some require up to five years, especially if you are asking early.
Second, check your payment history. Lenders look at this. They want to see that you have been making your payments on time. No thirty-day lates in the last year. No sixty-day lates in the last two years.
Third, make sure there are no junior liens on the property. No second mortgages. No home equity loans. No HELOCs. Those complicate the equity picture.
Then get the appraisal. S. Keenan, INC. in Elgin, IL who provides a professional PMI removal appraisal that lenders accept.
How Much Does the Appraisal Cost?
A PMI removal appraisal typically costs between four hundred and seven hundred dollars. That is a one-time cost. Compare that to the monthly PMI payment you will eliminate. In many cases, the appraisal pays for itself in just a few months. S. Keenan, INC. in Elgin, IL provides competitive pricing and quick turnaround so you can start saving sooner.
What If the Appraisal Comes in Too Low?
It happens. Maybe the market cooled off. Maybe your home needs more work than you thought. If the appraisal comes in low, you have options.
You can wait and make more payments. You can make improvements and try again later. You can challenge the appraisal if you think the appraiser missed something. S. Keenan, INC. can help you understand your options and what makes sense for your situation.
Frequently Asked Questions
How much money can I actually save by removing PMI?
In Elgin, IL, the exact amount depends on your loan size and your PMI rate. On average, borrowers save anywhere from one hundred to four hundred dollars per month.
How does the PMI removal appraisal work?
The appraiser visits your home, inspects the condition, measures the rooms, and takes photos. Then they research comparable sales in your area.
When can I request PMI removal?
Check with your specific lender. S. Keenan, INC. can also advise you on typical requirements in your situation.
What is the magic number for PMI removal?
You need your loan balance to be eighty percent or less of your home’s current value. That is the magic threshold.
What if I have a second mortgage or HELOC?
Junior liens complicate things. Lenders usually require confirmation that there are no junior liens on the property.
Does FHA or VA have different rules?
FHA loans have different rules. For FHA loans originated after 2013, PMI can stay on for the life of the loan. . VA loans have no PMI at all.
How long does it take to get the appraisal done and PMI removed?
The appraisal itself takes about a week. Once you submit the appraisal to your lender, they have thirty days to respond by law.
What if my lender says no?
If your lender denies the request, ask them to explain why. Sometimes there is a misunderstanding.
Can I use a recent appraisal from a refinance for PMI removal?
Maybe. It depends on the lender. Some lenders will accept a recent appraisal if it was done within the past few months.
Why choose S. Keenan, INC. in Elgin, IL for a PMI removal appraisal?
S. Keenan, INC. in Elgin, IL provides honest, professional appraisals that lenders trust. Our team has deep knowledge of Northwest Indiana.
