When financing a home, you have options. Here are some of the most common loan…
As your mortgage professionals, we regularly monitor the status of your loan. Based on the length of time you’ve had your loan and recent changes to home values in the area, you may be able to save money each month by having your primary mortgage insurance (PMI) canceled.
What is private mortgage insurance (PMI)?
Mortgage insurance makes it possible to hand over a much smaller down payment and still qualify for a home loan. It protects the lender in case you default on the loan.
PMI is required when a borrower makes a down payment of less than 20% on the purchase of a home.
How may I be eligible to cancel MI?
The regular payments you’ve made toward your home loan combined with estimated increases to your home’s value mean you likely now owe less than 80% of your home’s current value.
How much can I save?
Amounts vary, but savings can equal hundreds of dollars a month. Check your current mortgage loan statement to view your payment breakdown and how much you currently pay for mortgage insurance.
So, how can MI be canceled? Here are 3 possible options:
• Paying down your mortgage for automatic or final termination of PMI. This way works for homeowners with conventional mortgages who have paid according to their original payment schedules and have reached the milestones of 22 percent equity or the halfway point in time. To be eligible, you must be up to date on your payments.
• Requesting PMI cancellation when mortgage balance reaches 80 percent. Homeowners can use this method once they have achieved 20 percent equity.
• Refinancing to get rid of PMI. This particular option works well in neighborhoods where home values are on the upswing. If your home value has declined, refinancing could have the opposite effect — you might be required to add PMI if your home equity has dropped.
Want to get started?
Let us know if you want to take a closer look at your specific scenario. We’ll be glad to help!