Some buyers want a home but can’t afford a 20% down payment. I understand! On a $500K property, a $25K down payment (5%) is a lot easier than $100K (20%). Lenders require those who put down less than 20% to secure PMI, Private Mortgage Insurance. PMI provides lenders a safety blanket and you flexibility, but can cost up to 2% of your loan annually. I’m here to tell you that you’re not handcuffed forever.
Here are a few tips on when and how to cancel PMI:
1. 20% Equity. The Homeowners Protection Act (HPA) allows you to request PMI removal upon accruing 20%+ equity and meeting key criteria (e.g., good payment history).
2. Property Appraisal. If your property value has increased and your equity is now 20%+, conduct an appraisal to confirm and request cancellation.
3. Automatic Cancellation. HPA mandates that PMI automatically cancel once your balance reaches 78% of original property value.
Ultimately, what percentage to put down is up to you, and I’m here to help. Whether you’re a first-time buyer, motivated seller, seasoned investor, ambitious agent, or anywhere in between, I look forward to working together!
– Leron Grossman, Real Estate Broker & Investment Expert
VictoryRealEstateLLC.com | Office: 215-709-0909