Mortgage insurance can be a big cost for homeowners. It may be anywhere from $100-200/month! Just think if you could get rid of that part of your mortgage payment!! I don’t know many people that would complain about that! So how can you do that?
Some homeowners can easily get rid of MI, others may have to refinance to get rid of MI.
Do you have an FHA mortgage? If you do, you will need to refinance to eliminate mortgage insurance. For many, if your rate is 4% or higher, it may make sense to look into refinancing an FHA mortgage.
Do you have a conventional loan? If so, you have a few options available to you.
- You can wait for MI to fall off automatically – this takes the longest to do. Once your loan is at 78% of the original value, the MI will automatically go away.
- Request the MI removal. You can request to have MI removed once you are at 80% of the original loan to value.
- You can request to have an appraisal done to see if you are below 80% loan to value. Usually you need to have had your loan for at least two years to get an appraisal to remove MI.
- Refinance your loan if you are lower than 80% with the new value and lower your rate if possible. You may be able to get a lower MI rate if you aren’t at 80% yet. It will depend on the appraisal.
Before you consider refinancing to remove MI, you want to talk to your loan officer and make sure it makes sense. Think about how long you will be living in the home before you spend the money to refinance. Figure out the costs involved and make sure you will recoup the costs in a timely manner.
Mortgage insurance is not a bad thing – it’s necessary to allow you to buy without 20% down but you don’t want to pay it longer than you have to! It allows you to buy a home sooner than you would be able to if you have to save that 20%. For many it makes sense to pay mortgage insurance for awhile but you do not want to over pay! Talk to your loan officer if you aren’t sure about your situation!
Leslie Vanderwerf, NMLS ID#335509, Everett Financial Inc, dba Supreme Lending, An Equal Housing Lender, NMLS#2129 – Email – Website
