Your monthly mortgage loan payments are made up of various costs, and many borrowers are also required to pay Private Mortgage Insurance (PMI) each month, which are additional costs that are added into their mortgage loan payments. Borrowers who put down less than 20 percent of the home’s sale price will be required to pay PMI until their principal balance falls below 80 percent. If you are looking for a way to lower your mortgage loan payments, eliminating your PMI is one way to do so. There are a few different ways that you can potentially eliminate PMI—whether you already own a home and you’re making mortgage loan payments, or if you’re currently house hunting and looking for ways to keep costs down. To avoid paying PMI each month, try the following:
You may be able to get your lender to pay your PMI if you’re wiling to settle for a higher interest rate. Depending on the length of your home loan and how long you plan on staying in your home, this option can help you to save money and can be a good short-term solution. However, if you plan on staying in your home for many years, you’ll usually want to avoid opting for the higher interest rate and just go ahead and pay the monthly PMI. In the long run, this will save you more money.
Take out an 80-10-10 mortgage loan
With this type of mortgage loan, borrowers put down 10 percent and take out a mortgage loan for just 80 percent of the home’s sale price, and then take out a second mortgage loan for the remaining 10 percent. Also referred to as piggyback loans, these home loans can be a way to get around paying PMI.
Your PMI will automatically stop once the time comes, regardless of whether or not you submitted the written request. It may not help you eliminate your PMI any sooner, but you should expect that it will automatically be taken off your monthly mortgage loan statement once your principal balance has dipped below 80 percent and you have made timely payments.
FHA home loans, VA mortgage loans, and other non-conventional mortgage loans have their own terms and conditions that often differ from traditional mortgage loans—PMI included. If you have a different type of mortgage loan, you’ll want to ask your lender about what options you might have for getting rid of your PMI sooner. If you’re still shopping around for a mortgage loan, you might qualify for one that doesn’t require monthly PMI, regardless of your down payment amount.
Are you receiving long-term payments from an annuity and need to receive your cash sooner? Receiving your money sooner and in one lump sum payment can make it easier to pay bills or to make a large purchase, such as a home. If you need money for your down payment, receiving the cash you need to put down at least 20 percent, can give you the opportunity to eliminate PMI from the get-go. Contact Peachtree Financial Solutions today to learn more about selling some or all of your future payments for a lump sum payment.
Nothing above is meant to provide financial, tax, or legal advice. You should meet with appropriate professionals for such services.