How can I terminate my private mortgage insurance?
By Bob RedtreeHow can I terminate my private mortgage insurance? Read here on ways to end your private mortgage insurance requirements!
While home prices continue to fall and interest rates remain low, many people think now is the most affordable time to purchase a home. One cost that is often overlooked by home purchasers is private mortgage insurance, which can cost hundreds of dollars per month. Luckily, there are ways to terminate private mortgage insurance.
Pay Down Your Mortgage
The first way you can terminate your private mortgage insurance is to pay down your mortgage. Private mortgage insurance is only charged if you have less than 20% equity in your home. Over time, you will pay down your mortgage to the point where you have 20% or more equity in your home. At this point, the bank is required to terminate the private mortgage insurance. Unfortunately, depending on your down payment, it could take 10+ years to reach 20% equity.
Refinance Your Mortgage
The second way you can terminate your private mortgage insurance is to refinance your mortgage. When you look to refinance your mortgage, ask your lender if you can get a second mortgage as opposed to paying PMI. When getting a mortgage, the first will cover 80% of the purchase price and the second will cover up to the remaining 20%. This is a beneficial option over paying PMI because the interest is deductible and the loan amortizes.
Get a New Appraisal
The last way you can terminate your private mortgage insurance is to get a new appraisal. If you feel your home has appreciated since you purchased it and that you now have 20% equity in your home, you should get a new appraisal. If the appraisal proves that you have 20% or more equity in your home, your mortgage lender will be required to cancel the private mortgage insurance requirement.
Related posts:
- What Is Private Mortgage Insurance?
- Does Private Mortgage Insurance Offer Any Tax Advantage?
- Why Do I Need Private Mortgage Insurance?
- What Type Of Insurance Do I Need When Getting A Home Mortgage?
- How Much Does Mortgage Loan Insurance Cost?
