1. Not realizing that if you made a down payment of less than 20%, you are paying for Private Mortgage Insurance.
2. Not realizing that when your principal is paid down below 80% that some mortgage companies won't automatically cancel your PMI. They will continue to charge you until YOU ask for it to be cancelled.
3. Not knowing that there is a new Homeowner's Protection Act that was passed by Congress in 1998 to prevent collection of unnecessary PMI payments. However, this act only covers loans initiated on or after July 29, 1999. If your loan was effective before that date, you are not covered and must take steps to protect yourself.
4. Not crunching your own numbers to see how you can get your loan paid off to below the 80% PMI cut-off. This is up to you.
5. Not factoring in appreciation in your calculations. You may have more equity than you think. The 80% is off the original loan value or the value of the home.
6. Not finding out what your market value really is. You can do this through a real estate agent or by hiring an appraiser.
7. Not asking for it to be cancelled. If you have reached your cut-off point, write to your lender and make a qualified written request for your PMI to be cancelled.
8. Not attaching other materials to make your case in your written request. Don't expect a lender to buy your calculations without proof.
Ready?
On to the quiz...
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