How Much Equity Do You Need to Get Rid of Mortgage Insurance?
Filed under: Mortgage Rates
Today I’m sharing tips about a common topic that I hear: mortgage insurance. If you want to avoid this payment, then you need to have a certain amount of equity in a home to eliminate the extra mortgage insurance payment. One of the most common questions I hear is: how much equity is needed to get rid of mortgage insurance?
Rule of Thumb for Mortgage Insurance
Typically, the rule of thumb for mortgage insurance is that lenders require 22% equity in the home. With that said, the lender will likely require an appraisal to prove that you have at least 22% equity.
This appraisal usually costs anywhere from $400 – $500. But honestly, you will recover that money within the first two months of not having mortgage insurance. Paying for the appraisal to prove that you’ve met the 22% requirement is a great investment so that you can eliminate the monthly payment for mortgage insurance.
If you think there’s a chance that you can remove the mortgage insurance, then I encourage you to talk to your lender and schedule a time for an appraisal. Always have a conversation with your lender before spending money on the appraisal, to ensure that nothing is overlooked in this process.
Save Thousands of Dollars
Do the math on the amount of money that you are paying for mortgage insurance. You will find that you can save thousands of dollars over the life of the loan by eliminating the mortgage insurance when you meet the 22% requirement. You have the option to use that money for other household needs. Or, you can apply the extra money to pay down your mortgage faster, helping you reduce the amount of interest paid overall and speed up the payoff timeline.
I am always searching for ways to help my clients get the best deals on their homes. If you are looking for more real estate advice, then I’m here to help. You’re welcome to talk to me at any time. Call, text or email: (951) 473-0390 or [email protected]