If you purchased your home with less than a 20% down payment and did not use an FHA or VA loan then you quite likely pay PMI (Private Morgtage Insurance ) every month. Are you aware that it is possible to get this payment eliminated? The savings can be very rewarding.
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How much could you save? |
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For Example: |
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| Purchase Price: | $75,000 | $100,000 | $150,000 |
| Down Payment: | $3,750 | $5,000 | $7,500 |
| Mortgage Amount: | 71,250 | $95,000 | $142,500 |
| Annual PMI Cost: | $712 | $950 | $1,425 |
There are several considerations in getting your PMI insurance requirement removed. Specific rules may vary with the lender but the most important are an 80% Loan to Value Ratio ( LTV ) and a good payment history. The loan to value ratio is determined by your mortgage balance and the current market value of your home. If you purchased your home with 5% down, the initial LTV ratio was 95%. As you make payments the LTV decreases because your mortgage balance decreases. In addition though, if you have made improvements or additions or your property or it has increased in value due to time or because your area has become more desirable, this could increase the market value of the home and decreases the LTV ratio. If so, you may have reached a point where the mortgage holder could eliminate the PMI. To accomplish this you will have to prove it to him with an appraisal. They will not do this for you out of the kindness of their heart. You must provide the proof and request that the insurance requirement be eliminated. As you can see from the table above, the savings can be many times the cost of an appraisal and the savings go on every year at no additional cost.