When you buy a home, you learn there are many little costs that accumulate over time: mortgage, interest, insurance, utilities, maintenance, etc. Many of these are recurring expenses about which little can be done. There is one expensive, however, that homeowners can eliminate, and should do so as soon as possible.
Lenders require private mortgage insurance (commonly called PMI) from homebuyers who take out loans that are more than 80 percent of a property’s value. If you buy a home using a down payment of less than 20 percent, you’re usually required to carry PMI.
OmniNerd recently published an article that describes how canceling private mortgage insurance early can save money:
If you pay PMI, be aware of the figure used by your mortgage company to determine when to allow PMI cancellation. Take whatever reasonable actions you can to cancel your PMI early, including appraising your home, paying additional principle, and contacting your lender promptly with the appropriate correspondence. Doing so could save you thousands.
If you think you may be paying PMI, check your most recent mortgage statement. It’s worth your time to investigate. If the value of your house has risen over the past few years, you may be able to save money by canceling the payment. In addition to the OmniNerd article, you can learn more at the FTC web site.