When you purchase a home for less than 20% down, you usually have to pay mortgage insurance with your monthly payment. How can you get rid of your mortgage insurance?
It actually depends on what kind of loan you have.
If you have a conventional loan, you can reach out to your lender and let them know that you have enough equity in the property to get rid of the mortgage insurance. Depending on the company, they may charge you anywhere from $300 to $500. They will send out a new appraiser to confirm that you do have 20% equity in your home, and then they will remove your mortgage insurance payment.
When home values increase and mortgage rates go down, you also have the option to reach out to your mortgage broker and ask about refinancing. If they can cover all the closing costs for you, you’ll save that $300 to $500 and get rid of your mortgage insurance. Not only that, but refinancing can potentially lower your interest rate and your monthly payments even further.
Now if you have an FHA mortgage, that is a bit more difficult to analyze.Depending on when you got the FHA loan, you may be required to keep that mortgage insurance for a certain amount of time regardless of how much equity is in the property.
It’s always a good idea to reach out to your mortgage company and have them check the market for you to see if there is a chance you can refinance your FHA loan into a conventional loan. Your mortgage company will also let you know if it’s best for you to stick it out and finish those mortgage insurance payments on your FHA loan.
If you have any other questions about mortgage insurance or would like to learn more about refinancing, just give us a call or send us an email. We would be happy to help you!