Monday, January 09, 2006

Can high credit score help cancel mortgage insurance?


How are you doing on this new year?

I am giving you an interesting quote I just read which may help you guys. :)
DEAR BOB: I have a FICO (Fair Isaac Corp.) credit score of 750 and wonder why I am still paying PMI (private mortgage insurance)? --Jennifer R.

DEAR JENNIFER: Congratulations on your superb FICO credit score. However, that has nothing to do with your obligation to pay PMI.

Purchase Bob Bruss reports online.

When you bought your house or condo, you probably paid little or no cash down payment. Because of your high FICO credit score, your lender approved a high loan-to-value-ratio mortgage. But the lender insisted on PMI to eliminate its high foreclosure loss risk.

After you achieve at least 20 percent equity in your house or condo, ask your mortgage lender to cancel your PMI premium, which is then unnecessary to protect the lender's 80 percent or lower mortgage. Until you have at least 20 percent equity, your lender still views you as a high risk, which requires PMI to protect the lender.

However, until your home loan has at least 24 months of on-time monthly payments, most mortgage lenders will refuse to cancel PMI. Some especially nasty lenders won't cancel PMI until the loan balance declines below 80 percent of its original balance, ignoring your home improvements and market value appreciation.

That usually takes 10 to 15 years, depending on your interest rate. If you have one of these really bad lenders, my best advice is refinance with a better lender who doesn't require PMI.

Can high credit score help cancel mortgage insurance?

Johncy Edward

Your Trusted Credit Score Guru


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