The current value of his mortgage must be no higher than $126,360 for him to request termination of his PMI policy.
What is mortgage value?
The appraised value of the property used to determine the mortgage value is determined by a reputable firm. It might not match the purchase-sale value. The mortgage value, which serves as the Bank's guarantee, is the benchmark used in the mortgage application and arrangement process.
Given:
Brett bought a house five years ago for $150,000.
At that time he borrowed $140,000 from his bank.
The house is now worth $162,000.
Once his equity has increased to 22% of the current market value he can request that PMI be canceled.
He may request termination of request when his mortgage balance reaches
162,000(1 - 0.22) = 162,000(0.78) = 126,360.
Hence, the current value of his mortgage must be no higher than $126,360 for him to request termination of his PMI policy.
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