One Way to Reduce Your House Payment
May 08, 2018
Reduce Your House Payment | Master Brokers | 828-726-9180
If you put less than a 20% down payment on your home when you purchased it, chances are you are paying private mortgage insurance (PMI). The amount of PMI that you pay every month is for the benefit of the lender in case you default on your loan. According to The Mortgage Insurance Companies of America, it is estimated that 90% of homeowners are done paying PMI premiums within five years. Your lender should cancel this insurance once your mortgage is paid down yielding a 78% loan to value ratio, but only if you purchased a home before 1999. Otherwise, if you purchased your home after 1999 and believe that you have at least 20% equity in your home, then you can contact your lender to request cancellation of the PMI. The lender will probably require an appraisal be performed, which will be a cost to you, to ensure that you have at least 20% equity in your home. However, with the savings of no longer paying PMI for the remainder of your loan this will far outweigh the cost of the appraisal. With the increase in market values over the past couple of years and depending on how long you have owned your home, this option may be worth checking into.
Source: Houselogic
