How to Get Rid of Mortgage Insurance Payments

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When you buy a new house, you may not have enough for a substantial down payment, which means that you will pay private mortgage insurance (PMI) on top of your mortgage payment each month. This monthly fee can add stress to your bills. So how do you get rid of that extra payment?

How to Remove Mortgage Insurance from Your Mortgage Payment

If you have owned your home for a fair amount of time, the home value has increased significantly in this market. When you gain enough equity in your home to reach 22%, a lender will negotiate a new mortgage without the extra PMI.

This can result in big monthly savings when you get rid of your mortgage insurance payment. For example, the PMI on a $500,000 home can be around $250 per month. Imagine if you can permanently reduce your mortgage payment by $250 each month.

What the Lender Needs

In order to prove that your home has appreciated in value, your lender will ask for an appraisal of your home. Unfortunately, an appraisal can be pricey, costing up to $500. The appraiser will assess your home and compare it to similar homes in the area. When they see the selling price of homes in 2021, they will be able to determine how much your house has risen in value.

You don’t have to prepare your home for an appraiser like you would if you put it up for sale. Clean your home and have it in good condition for the appraisal appointment. And then let the comps in the neighborhood determine the value.

Even if you have to pay $500 for an appraisal, you will make up that money in a month or two of savings from not having to pay your mortgage insurance. So if you think you have 22% or more equity in your home, it is a good idea to get an appraisal and reevaluate your mortgage insurance payments.

With rising home values in Temecula, you may have reached enough equity in your home to eliminate the private mortgage insurance payment that is rolled into your monthly mortgage. For more information on how to go about this process, text, call or email me at (951) 473-0390 or [email protected].