It may be worth it to contact your loan servicer or real estate agent to see if they think an appraisal of your home could eliminate your PMI payment.
My wife and I bought our first home in 2019, back when interest rates and home prices in the Des Moines area were lower than they are today. For 4 and a half years we have been making the normal monthly payment including principal, interest, property taxes, and private mortgage insurance (PMI). Like many Americans, we were trying to figure out a way to save more money and spend less. So, we decided to try and ditch the monthly PMI payment. For many people this will happen normally overtime, however there is a chance that if you are currently paying PMI you may be able to say goodbye to that monthly expense.
- What is PMI? Private mortgage insurance (PMI) is a type of mortgage insurance you might be required to buy if you take out a conventional loan with a down payment of less than 20% of the purchase price. PMI protects the lender—not you—if you stop making payments on your loan.
- How do I pay for PMI? The most common way to pay for PMI is a monthly premium. Although, sometimes you may pay for PMI with a one-time up-front premium. Occasionally, your loan servicer may offer you a mix of the two options, a small amount up-front and the remainder on a monthly payment.
- How do I know if I am paying PMI? If you receive a monthly statement (mail or online) for your mortgage, PMI will be listed alongside your escrow amount, taxes, principal, and interest.
- When can I remove PMI from my loan? You have the right to remove PMI for many mortgages, once you have paid down your mortgage to a specified point, usually when the principal balance on your loan is 80% of the home's original value.
Based off our monthly mortgage payment, it was going to be another 4 years until we hit the 20% equity mark relative to the purchase price of our house. However, the current value of our home is higher than what we purchased the home for a few years ago (common in most areas of the country). Therefore, we contacted our loan servicer and requested that PMI be dropped from our loan. It was as simple as a 15 minute conversation, an appraisal, and a small fee. Now our monthly mortgage payment no longer includes PMI insurance.
There is a good chance that you are currently not paying PMI on your monthly mortgage if:
1) you put more than 20% down when you purchased your home
2) you have been making additional monthly payments
3) if you have been in your home for 10+ years.
If you are still paying the monthly PMI expense, it may be worth it to contact your loan servicer or real estate agent to see if they think an appraisal of your home could eliminate your PMI payment.
Sources. www.consumerfinance.gov / www.mortgagecalculator.org