Here’s everything you need to know about PMI and how you can get rid of it.
Like other kinds of mortgage insurance, private mortgage insurance (commonly referred to as PMI) is designed to protect the lender—not you—if you stop making payments on your loan for whatever reason. Though arranged by the lender, PMI is provided by private insurance companies and is usually required when you have a conventional loan and make a down payment less than 20% of the home’s purchase price.
As a new homeowner, your goal is to reach a 20% threshold so you can get rid of that PMI, which is essentially a junk fee as far as you’re concerned. Every lender has their own process for determining whether you’ve reached that mark.
However, before you reach out to your lender and pay a fee, reach out to your Realtor and have us run the numbers for you. At no cost to you, we can see if you’re likely at the necessary threshold to remove your PMI. Then, if the numbers come out in your favor, you can reach out to your mortgage company and go through their process. That way, if you aren’t close to the market yet, you’re not wasting money.
Hopefully, this cleared up any questions you may have had regarding PMI. If you ever need any real estate assistance, we’re always here for you. We look forward to hearing from you soon!