Are you a homeowner who put down less than a 20% down payment on your home, and are currently paying private mortgage insurance? Private mortgage insurance, (or PMI), can add a significant cost to your monthly mortgage each month, but luckily, there are steps you can take to eliminate this added expense. If you are located in the areas of Knoxville, Maryville, Lenoir City, Oak Ridge, or Gatlinburg, Tennessee, and are interested in removing your private mortgage insurance payments, contact Foundation Network. Our loan specialists can work closely with you to determine your eligibility and find the best financing solutions for your situation.
What Is Private Mortgage Insurance?
The primary purpose of private mortgage insurance is to protect the mortgage lender in the event that the borrower is unable to make the required payments. Typically, if a borrower makes a down payment of less than 20%, it may be considered a riskier investment for a lender, therefore, PMI is required in case a borrower defaults on the loan. Private mortgage insurance is generally included in the monthly mortgage payment, but sometimes it can be paid up front during the closing of the home. Your lender is required to provide an estimate of how long you will have to pay for private mortgage insurance at the time you close on your home.
Steps To Eliminating Private Mortgage Insurance
PMI can be an expensive additional cost when buying a home, but fortunately, it is not permanent. You can eliminate private mortgage insurance as you build up more equity into your home. In order to remove PMI, you must have paid down your mortgage balance to 80 percent of the home’s originally appraised value, so essentially, you must have 20 percent equity in your home. Another way to get rid of PMI is to make consistent payments and have your mortgage balance get to 78 percent of the original price that you purchased the home at. Another way to remove PMI is to refinance your home if your new mortgage balance falls below 80 percent of the home’s value. Depending on trends in the real estate market, the amount of time it takes your home to reach 20 percent equity could happen faster than originally planned, so you could possibly get your private mortgage insurance removed if you get a new appraisal on your home. Paying for private mortgage insurance can be a pricey additional expense, so it definitely is advantageous if you are able to terminate the payments early.
Get Help Removing Your Private Mortgage Insurance
Eliminating the cost of private mortgage insurance can save you a significant amount of money. If you are located in Knoxville, Maryville, Lenoir City, Oak Ridge, or Gatlinburg, Tennessee Foundation Mortgage is here to help you understand how you can stop paying the additional cost of a monthly PMI payment. Contact us today for a consultation.