| Mortgage Insurance
PMI - What is it and do I have to have it?
If you are a Ruidoso real estate owner or looking to buy New Mexico real  estate, you are probably familiar with hearing the term PMI. Maybe you haven't heard of it and need to understand it more. This article is for you. When you understand what it is and how it affects you, you will have a greater understanding of your mortgage and how it affects your payment.
PMI stands for Private Mortgage insurance. This is an insurance that lenders require real estate owners to have when their lending amount is 80% or greater than the home amount. This is basically a protection for lenders allowing people with smaller down payment from defaulting on their loan. When a person takes out a loan for most of the home value, it is seen as a bigger risk than those that have put down a larger down payment. Private Mortgage Insurance helps recoup costs if, in fact, a person defaulted on their loan.
So What Happens When The 80% is Reached?
When a homeowner reaches 80% of their mortgage left to be paid, they can request that PMI be dropped. You will have to contact the lender directly to have this taken off. The Private mortgage insurance does not automatically come off until half way through the loan. Most people don't know this and can end up spending thousands more then they have to just because they are unaware of their rights.
Another factor consider when requesting the PMI be removed is that you have not been more than 30 days late in your mortgage the past year and not more than 60 days late in the past 2 years. The lender can deny your request if you show a pattern of being late on payment.
You can also reach the 80% PMI cancellation quicker if your lender allows the current market value of the home. If your Ruidoso real estate has risen in market value, the lender may allow you to cancel the PMI for this reason. Although it is an option, a lender does not have to accept this offer. They have the right to deny this request; all you can do is try and see if they allow it.
The best thing to do when monitoring PMI is to look at it yearly. Stay informed of your loan and be in touch with your lender. Keep a date on the calendar to call and check with your lender to see where you stand. Not being informed can end up costing you hundreds in the end.
Contact me today for more information on lenders or any Ruidoso New Mexico real estate questions. I am here to help make your transaction as smooth as I can.
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