PMI, or private mortgage insurance is required on any 1st mortgage with a loan to value of 80% or greater. Contrary to what many believe, its purpose is to protect the lender (not the mortgage holder) in the event of a default on the mortgage. As you pay down your mortgage to below 80% LTV (most require you to pay down to 78%), you should consider what your options are for getting rid of this extra payment.
1. Keep up with homes are selling for in your neighborhood. If you are at 78% loan to value based on what comparable homes are selling for, then simply call your lender to discuss this with them. Personally, I would call even at 80%. They may require you to put your request in writing and they may require an appraisal which you will need to pay for.
2. Refinance. If you know that your home would appraise for at least 20% more than you owe, then perhaps a refinance should be considered. This can accomplish many goals such as reducing your rate or converting an adjustable rate to a fixed rate at the same time. Just know that you will incur fees so make sure there is room for those fees within the 80% loan to value ratio.
3. Pay Down Your Mortgage aggressively. If you aren't close to being at the 80% LTV, then you need to look at how you get their as quickly as possible. You can pre-pay principal to make this happen, but the absolute best way to pay down your principal in the fastest amount of time is with a Money Merge Account. The Money Merge Account is a new system being used by thousands of homeowners across America to reduce their mortgage by 1/3 to 1/2 with out refinancing. It's not for everyone, but currently, you can get a FREE Mortgage Savings Analysis from MortgageZapper.com. I highly recommend the Money Merge Account as a valuable financial planning tool. It will not only help you reach your goal of paying down your mortgage to reduce PMI, but will help you achieve the seemingly unattainable goal if paying off your mortgage completely.
Once you get that extra $50 - $200+ in your pocket every month, I strongly recommend speaking with an investment advisor to discuss the best way to make it grow even further.
1 comment:
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