If you bought a house with less than a 20% downpayment, then chances are high that you are paying private mortgage insurance (PMI). This is a monthly premium added on to your payments to help protect mortgage lenders against a loss in case you stop making your mortgage payments.

You might be able to eliminate your PMI and save yourself a few hundred or more dollars a year. Financial website Bankrate’s article, 9 steps to cancel PMI, provides the following tips for homeowners who are looking to save money by getting rid of their private mortgage insurance:

• Check with your mortgage lender to see if you qualify. Most homeowners will be able to eliminate PMI once their equity has exceeded 20% of the loan amount. However, some FHA and VA loans will not waive private mortgage insurance.
• Know the amount of equity you have in the house. Your current mortgage needs to be 78% or less of the original loan amount.
• Find out the current value of your house. Contact your lender to see if a formal appraisal is required to have your PMI eliminated. If the appraisal shows that the house has appreciated, you may have enough equity in your house to eliminate your PMI.
• Make extra payments. If you can make extra mortgage payments, you will build up equity faster in your house and get closer to eliminating your PMI.
• Call or write your lender. Once you have determined that you’re within 78% or less of the original loan amount on your mortgage, contact your lender to request that your PMI is eliminated.

Have you been able to eliminate your PMI? Connect2Agent asks that you share your story by commenting below.

Posted by Rebecca D. Levinson

This entry was posted on Tuesday, January 15th, 2008 at 6:00 am and is filed under Homeowner Advice, Mortgage Advice. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.