For many, owning a home goes from being a dream to reality through the use of a mortgage loan. To qualify for a mortgage loan, many lenders require their borrower’s to already have a down payment of at least 20 percent.
If the homebuyer has less than a 20 percent down payment available, many lenders will require the homebuyer to pay for private mortgage insurance (PMI). PMI protects their loan investment in the case a borrower defaults on the loan and usually ends once the buyer reaches around 80 percent left of the home value.
Can PMI be removed early?
There are multiple ways to cancel PMI payments faster than paying your usually monthly mortgage payment. One way is by increasing your monthly mortgage payment so you can reach the 20 percent value mark quicker.
If the current value of your home has increased since you closed on the property, this may be grounds for your PMI payments to be dropped.
Can you get rid of PMI by reappraisal?
Once you reach 20 percent equity in your home you can request PMI cancellation. Even though this goal can be met with regular, on-time payments - with the growing real estate market, many homes have increased in value. This value increase can help you reach or exceed the 20 percent equity benchmark faster.
For example, if you purchased a home for $400,000 and put $60,000 down (a 15 percent down payment), you’d have to pay for PMI. However, you find out through research that your home is now worth $440,000, you now have $100,000 of equity in your home. This amount is over the 20 percent mark, giving you grounds for PMI cancellation.
By doing your research and contacting your mortgage servicer to explore options, you can eliminate monthly payments to PMI insurance and save money.
About the Author
Pablo Torres
Pablo Torres is a qualified Real Estate Agent with over 10 years experience in real estate sales, due diligence and contract negotiations. Knowledgeable of South Florida neighborhoods. Currently, Pablo focuses his skills on all markets in the Miami metropolitan area.
He has the ability to understand sellers, buyers and renters needs with excellent communication. Fluent in English and Spanish with working knowledge of Portuguese. Pablo has impeccable reputation and a passion for real estate.
He graduated with a degree in International Business from Florida International University (1998) and a masters in business administration from Nova Southeastern University (2003). He had embarked on a career in commercial banking before being driven to switch to one of his passions-real estate.
Dedication, perseverance and punctuality allowed Pablo to sell different types of properties. His expertise with South Florida's cultural diversity has allowed him to sell real estate to both buyers and sellers.
Part of what makes Pablo so successful is his dedication to exceptional customer service and his devotion to their needs, whether they are buying or selling properties. Pablo has many repeat customers who cite his willingness to work long hours to resolve the toughest issues, as a reason why they stick with him. Torres integrity, attention to detail and careful handling of a transaction, exceeds their expectations. Sellers know that Pablo's extensive and personalized marketing strategies, means that their listing is seen by most buyers.
As a real estate professional, Pablo has the tools to represent your interests in virtually any transaction. Pablo's ability to interview, reason and figure out the smallest details makes every successful transaction a seamless process. Pablo is the right real estate professional to hire.
