Getting rid of PMI
You may have the opportunity to save hundreds of dollars every month by eliminating PMI from your mortgage.
Do you own your home?
Have you checked the market value lately?
House prices have been going through the roof. (Dad humor…..)
What is PMI?
PMI stands for Private Mortgage Insurance. It protects your lender, not you in case you don't pay your mortgage. PMI is usually required by the lender of a conventional note when the loan value is greater than 80% of the value of the home. If you have a conventional mortgage and did not put down 20% or more, it is likely PMI was required for your mortgage.
Am I paying PMI?
If it was required, you may have paid for all of your PMI in a lump sum at time of closing. You may be paying PMI installments every month. Check your mortgage statement. If you are paying it, you will likely see it itemized there. You can also just give your mortgage company a call and ask them.
So how do I get rid of it?
You should ask your mortgage company for their specific process for eliminating PMI. Generally, if you have paid your balance down to less than 80% of the original purchase price, that may be all that is required. If you believe the home value has increased so the loan balance is less than 80% of the value, the mortgage company may require an appraisal of the property.
What if I have PMI but my lender has a time limit or other constraint that prevents me from eliminating my PMI?
You may decide to refinance your home. If you plan to remain in your home for some time, and the savings is enough to offset the cost of refinance, it might be worth it.