From Yahoo Finance: 2024-04-30 14:06:00

Private mortgage insurance (PMI) is common for homeowners, with a quarter of 30-year fixed-rate conventional mortgages having PMI. It allows for smaller down payments but can increase monthly payments by hundreds. PMI protects lenders, not borrowers, if they default on the loan. PMI costs about $30 to $70 per month for every $100,000 borrowed.

PMI can help riskier borrowers qualify for loans. It can be canceled once your loan-to-value ratio reaches 78%, or you can request cancellation at 80%. Lenders must also cancel PMI at the halfway point of your loan’s amortization schedule. FHA loans have a similar insurance called MIP.

To remove PMI, you can pay down your mortgage balance, increase property value, refinance, or make larger payments. PMI can add $90 to $210 to your monthly mortgage payment. Removing PMI can save you hundreds per month, increase cash flow, and help pay off debts quicker.

Removing PMI has drawbacks like refinancing costs or needing a new appraisal. It can deplete savings, make it harder to achieve financial goals, or get expensive with home improvements. Removing PMI can save money in the long run, but weigh costs against potential savings first.

PMI is not permanent on conventional loans. Once your LTV ratio reaches 78% or halfway through the mortgage term, PMI will automatically end. Paying down your mortgage balance aggressively is the fastest way to remove PMI. Once your balance reaches 80% of the home’s value, you can request cancellation from your lender.



Read more at Yahoo Finance: How to get rid of PMI and lower your mortgage payments