If your mortgage company is requiring Private Mortgage Insurance with your loan there are ways around paying for this insurance. Private Mortgage Insurance does nothing to protect the homeowner and can add hundreds of dollars to your monthly mortgage payment. Here is one way to avoid paying for Private Mortgage Insurance.
Cancel your PMI mortgage insurance as soon as you can. Most PMI's can be canceled once you've put enough equity into your home to equal 20 percent of the loan amount, or the home has appreciated enough in value to bring up the value of your initial investment. This cancellation won't happen automatically though; you need to actually call up your bank and get the ball rolling. To cancel your PMI, you'll need to prove the current market value of your home and that you've paid at least 20 percent of the equity initially borrowed to purchase the home.
To do this, have all your mortgage payments filed away and bring a summary of recent property listings from your area that show the current market value for a standard home similar to yours. Look to government subsidies. The Federal Housing Administration (FHA) offers what's called an FHA Home Loan. These aren't actual loans, but rather they provide insurance for home buyers who have low down payments, as low as 3 percent of the home's market value. Instead of you having to pay for private mortgage insurance, the FHA Home Loan program insures the loan, meaning you can save on your insurance and even secure a better interest rate. Not all lenders participate in the FHA program, so look for one in your area. Also, FHA home loans are subject to caps that differ depending on your county or region.
Finally, just look at your basic payment both ways. Which way is more affordable for your current needs? The pricing on these products fluctuates. One product may be cheaper than another based on loan amount, term, down payment and other factors. You may also qualify for a second mortgage to make up the remaining 20% down payment and avoid PMI mortgage insurance altogether. What works best for your needs?
Consult with a broker. Before you opt for your bank or lending institution's standard PMI, ask if you can obtain your own private mortgage insurance. You can sometimes find lower rates from a private insurer rather than going directly through your bank.
Cancel your PMI mortgage insurance as soon as you can. Most PMI's can be canceled once you've put enough equity into your home to equal 20 percent of the loan amount, or the home has appreciated enough in value to bring up the value of your initial investment. This cancellation won't happen automatically though; you need to actually call up your bank and get the ball rolling. To cancel your PMI, you'll need to prove the current market value of your home and that you've paid at least 20 percent of the equity initially borrowed to purchase the home.
To do this, have all your mortgage payments filed away and bring a summary of recent property listings from your area that show the current market value for a standard home similar to yours. Look to government subsidies. The Federal Housing Administration (FHA) offers what's called an FHA Home Loan. These aren't actual loans, but rather they provide insurance for home buyers who have low down payments, as low as 3 percent of the home's market value. Instead of you having to pay for private mortgage insurance, the FHA Home Loan program insures the loan, meaning you can save on your insurance and even secure a better interest rate. Not all lenders participate in the FHA program, so look for one in your area. Also, FHA home loans are subject to caps that differ depending on your county or region.
Finally, just look at your basic payment both ways. Which way is more affordable for your current needs? The pricing on these products fluctuates. One product may be cheaper than another based on loan amount, term, down payment and other factors. You may also qualify for a second mortgage to make up the remaining 20% down payment and avoid PMI mortgage insurance altogether. What works best for your needs?
Consult with a broker. Before you opt for your bank or lending institution's standard PMI, ask if you can obtain your own private mortgage insurance. You can sometimes find lower rates from a private insurer rather than going directly through your bank.
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