Are You Still Paying PMI?

Remember when you bought your home? It was an exciting day for you and your family. You finally had a house to call home, and when paid off would be a valuable property that is all yours.

When you bought that home and took out that mortgage, did you put at least 20% of the value down on purchase day?

If not, you were automatically enrolled in PMI… Private Mortgage Insurance. A method lenders use to protect themselves from people who default on their mortgages. Which can cost you from .3% up to 1.15% of the loan amount per year.

If you didn’t have at least 20% of the home value to put down when you bought and started your mortgage, you’re paying your PMI every month, as part of your mortgage payment.

By law, when you took out your mortgage, your lender was required to let you know how long you’ll have to pay PMI each month.

After you’ve been paying on your mortgage for a while, it’s a good idea to monitor your principle balance. (Especially if you are being smart, and making additional principle payments with each mortgage payment you send in.)

You see, when your principle balance drops to 80% of your home’s value when you took out your mortgage, you no longer have to pay PMI.

So your job is to keep on top of what your principle balance is. And when it falls to 80% of the value of your home as stated when you opened your mortgage account, it’s time to contact your lender and tell them to suspend your Private Mortgage Insurance.

By law, lenders are required to automatically drop your PMI when your principle balance reaches 78% of the value of your home.

But you can be smart, and contact them to cancel your PMI when your principle balance hits 80%, and you’ll save all those premiums you would have paid from when your principle hits 80% of value, to the month where your principle hits 78% of value.

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