How to get rid of PMI
Published: May 1, 2019
If you purchased your home with less than a 20% down payment, there’s a good chance your monthly mortgage payment includes something known as private mortgage insurance (PMI). This coverage is designed to protect your lender (not you) in the event that you’re unable to make payments on your loan.
Once you have more than 20% equity in your home (either by having your loan refinanced, paying off a large portion of your loan, or having your home re-appraised), you can ask to have the PMI removed from your monthly payment. In the meantime, it can be a real pain in your pocketbook.
Benefits of Dropping PMI
When PMI is dropped from your mortgage, you can start saving money on your monthly home loan payments. The amount of your PMI will vary depending on the size of your loan. Once you no longer have PMI, you can free up that money for other things, save it, or even use it to pay off your home faster (thus saving you money in interest down the road).
How to Get Rid of PMI
There are plenty of ways to go about getting rid of PMI. If you’ve had great payment history and a recent appraisal of your home shows that its value has remained consistent (or even improved), you may be able to contact your lender with a request for early cancellation of PMI. In some cases, refinancing your home may also allow you to escape PMI. Just be sure that it will make financial sense for you to go this route, as refinancing will come with its own closing costs and other fees.
Contact Santa Clara County Federal Credit Union Today
Our team at County Federal offers a number of home loan options, including refinancing options, that can help you avoid the burden of private mortgage insurance. Contact us today to find out more about how we can help save you money!