What is PMI (Private Mortgage Insurance)?
If you borrow more than 80% of the home value, you might have to pay PMI. PMI is collected with your mortgage payment and is a little extra ($50 – $100 approximately) every month. You don’t have to pay PMI if you put down 20% when you buy the house or get an 80/20 loan – a first loan for 80% (so you don’t require PMI) and a second loan for the remaining 20% (second loans don’t require PMI).
Your mortgage company will be able to explain your mortgage insurance, and the terms surrounding your mortgage insurance more specifically if needed. Basically, mortgage insurance is part of your monthly payment that your mortgage company charges if you owe a specific percent of what your home is worth. Typically, if you owe more than 80% of the value of your home, you will be paying mortgage insurance. If you live in an area where housing prices are increasing, it may be possible to remove your mortgage insurance and save a substantial amount of money each month. Most lenders will require that you live in your home for at least 1 year, and that you owe less than 80% of the value of your home. Contact your lender for their specific requirements. After you contact your lender, we will be happy to help you through the process. Our office staff is educated on mortgage insurance removal, and we can tell you what to do next.
