What Is Private Mortgage Insurance and how do I get rid of it?

When a homebuyer is looking to make a purchase, all kinds of new terminology can come into play. There is closing costs, discount points, and PMI just to name a few.

What is PMI?A chalkboard with Private Mortgage Insurance written on it.

Private mortgage insurance, also called PMI, is a type of mortgage insurance which you are required to pay for if you have a conventional loan.

Do you have to keep PMI forever?  The answer is yes and no, with an FHA loan mortgage insurance will continue for the life of the loan.  For all non-FHA mortgages once you have at least 20% equity in the home you may ask the lender to cancel the PMI.

There are also simple ways to get rid of mortgage insurance and/or strengthen your negotiating position:

Refinance: If your home value has enough equity built, you can refinance.  Doing so will no longer require mortgage insurance.

Get a new appraisal: If your homes’ value has gone up you could consider a new appraisal.  An appraisal generally costs $300 to $500.

Remodel: Add a room or an additional bathroom to increase your home’s market value.  At that point, you could ask the lender to recalculate your loan-to-value ratio using the new value.

The best way to see if a homeowner is eligible for a refinance is to speak with a licensed loan advisor. Please give us a call to discuss your situation and how we may be able to help put you in a better financial position by removing PMI.

The Certo Team
55 N. Arizona Place Suite #103
Chandler, AZ 85225

Contact a licensed housing specialist now! 602-429-6789