For people struggling in to amass enough money for a 20 percent down payment that is normally required for a conventional mortgage, the availability of PMI or private mortgage insurance has become a great option for first time buyers. Private mortgage insurance makes it possible for people who cannot afford to buy a home to be able to put as little as 3 percent down on a home purchase. The cost of the insurance is normally $25 to no more than $150 a month which in turn provides lenders with the same degree of protection and peace of mind as a large down payment. This helps thousands of people in New York buy houses that they normally would never get approved for.
Mortgage Insurance companies have come under fire in recent months for allowing borrowers to continue paying for insurance way after the need for there insurance policy has passed. Most Americans do not know that these policies can be voided after the properties equity reaches a certain point of the home value. Under New York law borrowers may have there private mortgage insurance canceled once there equity reaches 25 percent.
The problem is borrowers are never told or do not realize that the mortgage insurance is no longer necessary. Most people just don’t know that they can just opt out. Mr. D’Amato, who is the chairman of the Senate Committee on Banking, Housing and Urban Affairs, introduced legislation that would require lenders to advise there borrowers of there right to be able to cancel there PMI Insurance once they there equity reaches 20 percent. This proposal comes on the the the heels that Fannie Mae, the nations largest lender of homoe mortages, will soon be amending its guidelines regarding private mortgage insurance.
