Can You Remove Private Mortgage Insurance Premiums?

If you used a mortgage to purchase your home, and made a down payment of less than 20%, you probably have had to pay for private mortgage insurance. Private mortgage insurance, (or PMI), can add a significant cost to your monthly mortgage amount, but fortunately, there are steps you can take to end that additional expense. If you own a home in Orchard Park, New York, and are looking for ways to save money on home financing, Nickel City Funding, Inc. can help. Read on to learn more about removing private mortgage insurance premiums.

How Does Private Mortgage Insurance Work?

housejul2Private mortgage insurance is intended to protect lenders if a borrower is unable to make mortgage payments. It can be considered a riskier investment for a lender if a borrower makes a down payment under 20%, therefore PMI is required in case a borrower defaults on the loan. When you close on your home, your mortgage lender will be required to give you an approximation of the length of time you must make PMI payments. Your private mortgage insurance typically will be included in your monthly mortgage bill, however, sometimes it is possible to pay for it up front when you close on the home.

How To Remove Private Mortgage Insurance

Paying PMI can help you purchase a home without putting down 20%, but it does add a significant cost obligation over time. Fortunately, PMI doesn’t have to be permanent; once you have built up a certain amount of home equity. In order to remove private mortgage insurance, you must have 20% equity in your property, which essentially means that you have paid off 80% of your home’s originally appraised value. You also have the option of removing your PMI by making consistent and timely mortgage payments and having your mortgage balance reach 78% of the home’s purchase price. Another way to eliminate PMI is to refinance for a new mortgage principal that is below 80 percent of your home’s value. If circumstances in the real estate market are favorable, and you are able to reach 20% home equity more quickly than originally planned, it could be possible to remove PMI if you get an updated home appraisal and your property value is higher. Because PMI can be expensive, it is a good idea to try to eliminate the payments as early as possible.

Private Mortgage Insurance Removal Assistance

There are several costs associated with owning a home, and by removing private mortgage insurance premium costs, you can begin to start saving a substantial amount of money. If you are located in Orchard Park, New York, and have questions about how to save money with your home financing, contact Nickel City Funding, Inc. today for a consultation.

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Nickel City Funding, Inc.
3460 Seneca St.
West Seneca, NY 14224
Phone: 7165585200

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