How to Stop Paying for Mortgage Insurance
Filed under: Finances
When you bought your house, mortgage insurance might have been required if you didn’t have enough money available for a substantial down payment. So, not only are you paying your mortgage every month, but you also have a payment for private mortgage insurance (PMI). If you are looking for ways to reduce your monthly expenses, then there might be an option to get rid of this extra payment.
How to Get Rid of Mortgage Insurance
How long have you owned your home? If it’s been a while, then there is a good chance that the property value has increased. Once there is enough equity in your home equal to 22% of the value, then you can work with a lender to negotiate a new mortgage that doesn’t include PMI.
Eliminating a PMI payment can really add up over time. For example, if you have a $500,000 home then it means that your PMI payment is around $250 per month. You can eliminate this payment once your equity is high enough.
Documentation for the Lender
When you are working with the lender to eliminate your mortgage insurance, you need to show an updated appraisal of the property that proves the increase in value. Even though an appraisal can be pricey, it’s worth the investment because you can bring down your monthly payments going forward.
The appraiser will evaluate your home and compare it to similar homes in the area. Make sure your home is clean before the appraiser arrives, but you don’t need to go through the extra effort as if you are putting it for sale on the real estate market.
The money you spend on an appraisal will quickly pay off within 2 months of no mortgage insurance payment. So, if you think you have enough equity in the property, then talk to your lender about your options.
Real estate demand is staying high and prices continue to increase. So, you might have enough equity in your home to eliminate the mortgage insurance payment. If you want more information about mortgage insurance or any other topic, then text, call or email me at (951) 473-0390 or [email protected].