PMI automatically drops off at what loan-to-value ratio?

PMI automatically drops off at what loan-to-value ratio?

• A. 78% LTV
• B. 80% LTV
• C. 82% LTV
• D. 85% LTV

Answer: (A)

PMI is required to protect the lender when the borrower puts down less than 20%. Under the Homeowners Protection Act, PMI must automatically terminate when the loan balance reaches 78% of the original property value, provided you’re current on payments. At that point, the loan-to-value ratio has fallen to 78% based on the value used when the loan originated, and PMI isn't required anymore. For example, if the original property value was $200,000, automatic PMI cancellation happens when the loan balance drops to $156,000 or less, assuming timely payments. You can request cancellation at 80% LTV if you’re current and meet other requirements, but the automatic end point is 78% LTV.

PMI is required to protect the lender when the borrower puts down less than 20%. Under the Homeowners Protection Act, PMI must automatically terminate when the loan balance reaches 78% of the original property value, provided you’re current on payments. At that point, the loan-to-value ratio has fallen to 78% based on the value used when the loan originated, and PMI isn't required anymore. For example, if the original property value was $200,000, automatic PMI cancellation happens when the loan balance drops to $156,000 or less, assuming timely payments. You can request cancellation at 80% LTV if you’re current and meet other requirements, but the automatic end point is 78% LTV.