It's not a law, it may be a requirement from the mortgage company to insure the money they are loaning you. Generally, if you are putting down less than 20% the lender is making you pay the insurance so they lessen the risk they are taking . There are programs that allow you to put down less than 20% and not have to pay mortgage insurance. If you would like the name of a lender that can help you find one of these programs, let me know.
Conventional loans entertain lender paid mortgage insurance which is financed into the loan and there is no monthly payment, if you have a conventional loan that requires mortgage insurance and you beleive that you have 20% equity in the loan you can provide your lender with an appraisal and a letter requesting that the mortgage insurance be dropped. Iit is however at their dicression that it be removed.
hope this helps.
Camille Marotta, Branch Manager, NMLS 9838
First Alliance Home Mortgage
NMLS # 6395
Financing Kentucky One Home at a Time
The amount of insurance you will have to pay will be determined by the type of loan, and the manner in which you will pay it. For example, when putting 3.5% down using an fha loan, you will be required to pay a monthly mortgage insurance with a factor of 125 basis points and and up-front premium (allowed to be financed) of 1.75%.
Or you could have lender paid mortgage insurance in which the premium is paid through the interest rate. My most common mortgage insurance now is a single premium. It is paid up front or financed, saving you the monthly expense. Reach out to me or watch the video below to find out more. Best of luck!!
Joseph S. Cordova NMLS# 146855
Lincoln Mortgage Company
8003 Lincoln Drive West, Suite F
Marlton, NJ 08053
office: (856) 810-1200 ext. 242
direct fax: (206) 333-0946
cell: (856) 304-2381
Apply online at: http://www.joecordova.com
Once the value increases 20% or you pay down the loan to 80%, you can request it be withdrawn.
If you have a conventional loan with less than 20% in the deal than year Mortgage Insurance is required. In our current economy it is a necessary evil. The only program available without mortgage insurance is a USDA loan and it is driven by the property address and the household income. So if you believe that you would like to purchase a home without mortgage insurance there is a website that will let you know if the property is acceptable or not. http://www.USDA.gov
For more information from a professional with 30 year of experience, please call
Branch Nanager 732-539-9300 NMLS 9838
This type of insurance is usually only required if the downpayment is less than 20% of the sales price or appraised value (in other words, if the loan-to-value ratio (LTV) is 80% or more). Once the principal is reduced to 80% of value, the PMI is often no longer required.