Eliminating PMI is a goal of many homeowners. That’s because it’s not uncommon for first-time homebuyers to get into a property with less than 20% down. And when that’s the case, there’s an additional type of insurance a borrower pays to protect the lender in case of default.
For conventional loans, it’s called private mortgage insurance (PMI). And for FHA loans, it’s referred to as a mortgage insurance premium (MIP).
How to Eliminate PMI on a Conventional Loan
If you have a conventional mortgage with PMI and your home’s value has increased, you can ask your lender to remove it without refinancing.
There are rules about removing PMI. A few include:
- Your loan amount is 80% of the original value of the home
- Payment history is good, and you’re current on your payments
- There are no junior liens (HELOC, second mortgages, etc.)
If you have high-interest debts, you might consider refinancing and getting some cash-out to pay down debts,
How to Eliminate MIP on an FHA Home Loan
FHA government loans are outstanding. They’ve made the dream of homeownership come true for many people. But one significant disadvantage is with an. You’ll have a mortgage insurance premium (MIP) for the life of the loan.
So, the only way to get rid of it is to refinance into a different type of loan like a conventional mortgage.
Removing this extra insurance saves most homeowners $100 or more every month.
Increased Equity or Improved Credit?
Often first-time home buyers get an FHA loan because they either don’t have a 20% down payment or their credit isn’t the best. Sometimes, it’s both – small down payment and credit issues.
But circumstances can change – sometimes very quickly. Maybe your credit has improved, or your home has increased in value!
If you have this extra added insurance on your loan, Homestead Financial Mortgage can give you a few different options on how to eliminate PMI.
We’re Here to Save You Money
Whether you want to remove mortgage insurance or need cash out, we can close a refinance in 30 days. Contact us today, and you can learn about your options in just a few minutes.
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