If you want to lower your monthly mortgage payment, you must eliminate your private mortgage insurance.
If you’re looking to lower your monthly mortgage payment, you can do so by eliminating your primary mortgage insurance (PMI).
If you bought your home with a down payment of less than 20%, odds are you’re still paying PMI as part of your monthly mortgage payment. The only way to get rid of this is if you’ve built up at least 20% equity in your home. You can also decrease the PMI you’re paying if you’ve built up anything close to 20%.
Most homeowners don’t realize that they’ve already probably built up 20% equity. The more you pay down your principal balance and the higher the value of your property increases, the more your equity builds. However, this rule doesn’t apply to FHA loans. With FHA loans, your PMI is there for the entirety of the loan.
So to determine your equity, find your home’s current market value, figure out what you owe for your principal balance, and calculate the difference. If your equity is close to or over 20%, contact your lender and tell them you want to get rid of your PMI.
As always, if you have questions about this or any real estate topic, don’t hesitate to reach out to me. I’d love to help you.
