Who else LOVES to SAVE MONEY? You’ll love this real estate hack if you don’t already know.
No matter when you bought your house, if you did so with less than 20% down, your mortgage lender tacked on the extra cost of private mortgage insurance (PMI) as a standard precaution. Removing PMI payments can be a significant way to save money in the long run. PMI is usually required when a homebuyer makes a down payment of less than 20% on their home purchase. Once the homeowner reaches 20% equity in their home through mortgage payments or home value appreciation, they can request the cancellation of PMI.
By eliminating PMI, homeowners can potentially save hundreds or even thousands of dollars annually. This extra money can be put towards paying off the mortgage faster, saving for future goals, or investing in other financial endeavors. It’s essential to stay updated on the value of your home and the amount you owe on your mortgage to determine when you’re eligible to remove PMI and start enjoying the financial benefits of doing so.
In addition, PMI typically only protects the lender in the event of a default. According to NerdWallet, PMI rates usually range from .58% to 1.86% of the original loan amount. So, for example, a $400,000 loan with 7.5% down would mean your PMI payment would be $305/month (with a 700-credit score).
Let’s Talk PMI
Confident that your house is worth more today than when you purchased it?
Can I cancel PMI if my home value increases?
When does PMI go away?
Whether your individual mortgage qualifies for PMI removal will depend on factors like the current value of your home, the loan type, how much you still owe on the loan, and your payment history. With the example above, it would take 8.66 years for the lender to remove this $300 monthly payment. So, you would be paying over $31,000! However, do not stress because there are ways to remove this sooner.
How Can We Remove the PMI?
In all honesty, the hot real estate market of 2021-2022 meant many homeowners saw their equity rise. Even though a market shift is underway as of late due to higher interest rates, many homeowners with mortgages will most likely be sitting on significant equity due to still-high home values. In Q2 2022, a report from CoreLogic shows that homeowners with mortgages saw an equity increase of nearly 27.8% year-over-year. CoreLogic forecasts an average rise in home prices of 4.3% between June 2022 and June 2023.
As a result of this trend, NOW would be a good time for many borrowers to see if they qualify for private mortgage insurance cancellation. A higher equity stake in your home can lower the perceived risk of your mortgage and, in some cases, speed up the path to PMI removal. See! We told you not to stress!
In addition, because PMI can add tens of thousands of dollars in housing costs over the life of a loan, it’s essential to consider taking steps to remove PMI as soon as you’re eligible.
Long story short… … reach out to me anytime for a CMA! Our team would love to have coffee (or a margarita) with you to discuss it further. Pointe South is always looking for ways to save our customers money!
At Pointe South Rentals and Real Estate, our mission is to be the ultimate resource for all your real estate needs. Whether you’re looking to buy, sell, or rent a property in the beautiful Pensacola area, we are dedicated to providing exceptional service and helping you navigate the real estate market with ease. With our team of experienced professionals, extensive knowledge of the local market, and a commitment to client satisfaction, we strive to exceed your expectations.
We understand that buying or renting a property is a significant decision, and we are here to guide you every step of the way, offering personalized attention and expert advice. Trust Pointe South Rentals and Real Estate to be your trusted partner in achieving your real estate goals.
Here is to saving money in 2023!!!
susancarletonteam@pointesouth.com ~ 850.492.1148
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