PMI or Private Mortgage Insurance is a necessary evil for many first-time homebuyers. It is necessary because many people have trouble finding 20% to put down towards a home, especially as home values continue to skyrocket. However, just because you get an FHA or Federal Housing Authority loan doesn’t mean that you will pay PMI for the rest of your mortgage. Here’s how to get rid of PMI for good on your mortgage.
One method to get rid of your PMI is patience. If you keep pushing, chipping away at your mortgage and get it to where your LTV, or loan-to-value, is below 80%, where you will no longer be required to pay PMI. However, if you have an FHA loan, you will need to refinance to a different type of loan, as FHA loans require PMI throughout. This method may take several years, but will get you there without endangering your savings. You can also make extra payments to speed up the process.
A second method is to make home improvements and increase the value of your home. Do a capital improvement such as adding a bathroom or a bedroom or renovating a part of the home, and wait a year to reappraise the home. Hopefully this will push your value high enough that your LTV falls below that 80% mark and you can cancel PMI. Just try to stick to projects with high return on investment. Just don’t pay money on your renovation that could go towards paying down your mortgage.
If you have a Conventional loan, the lender is required to remove PMI from your mortgage if you hit 78% LTV. If you have an FHA loan, you are required to refinance to another loan to get PMI off your mortgage. Paying PMI in and of itself is not bad. It’s a necessary evil for many homeowners to buy their first home, but when you don’t have to pay it anymore, you shouldn’t.
A refinance with The Home Loan Expert could be just what you need to eliminate PMI. With home values skyrocketing and interest rates near all time lows, there has never been a better time to get rid of PMI.
Call The Home Loan Expert Team in St. Louis at (314) 781-9700, Chicago at (773) 770-4727, Indianapolis at (317) 550-1515, Nashville at (615) 810-8555 or Birmingham, AL at (205)721-7656. You can always apply online at hero.loan for your VA Loan, and www.thehomeloanexpert.com for your other mortgage needs, and will come to you to help close your loan. We work hard to make it easy on you. Nobody gets lower rates on better loans than The Home Loan Expert, Ryan Kelley, why go anywhere else?