This 12 issue newsletter focuses on ways to get the most out of your home, by giving current and timeless advice on refinancing, buying your first home and how to avoid common mistakes made by homeowners, wannabe homeowners and renters. So whether you are buying, refinancing or thinking about either, every issue covers a topic that will help you no matter what stage of homeownership you are in.

What is PMI? Can I get rid of the PMI on my loan?

PMI or Private M0rtgage Insurance is normally required when you buy a house with less than 20% down. M0rtgage insurance is a type of guarantee that helps protect lenders against the costs of foreclosure. This insurance protection is provided by private m0rtgage-insurance companies. It enables lenders to accept lower down pmts than they would normally accept. In effect, m0rtgage insurance provides what the equity of a higher down pmt would provide to cover a lender's losses in the unfortunate event of foreclosure. Therefore, without m0rtgage insurance, you might not be able to buy a home without a 20% down pmt.

The cost of PMI increases as your down pmt decreases. Example: The cost of PMI on a 10% down pmt is less than the cost of PMI on a 5% down pmt. Your PMI premium is normally added to your monthly m0rtgage pmt.

The decision on when to cancel the private insurance coverage does not depend solely on the degree of your equity in the home. The final say on terminating a private m0rtgage-insurance policy is reserved jointly for the lender and any investor who may have purchased an interest in the m0rtgage. However, in most cases, the lender will allow cancellation of m0rtgage insurance when the loan is paid down to 80% of the original property value. Some lenders may require that you pay PMI for one or two years before you may apply to remove it.

To cancel the PMI on your loan, contact your lender. In most cases, an appraisal will be required to determine the value of your property. You will probably also be required to pay for the cost of this appraisal. Another way of canceling the PMI on your loan is to refinance and to get a new loan without PMI.

Under the tax act of 2007 President Bush signed a bill that makes PMI tax deductable for most households.  Make sure to consult you tax advisor, mortgage planner, and financial planner for information on the best way to set up your mortgage for your particular situation!