When you get a mortgage to buy your new house, your mortgage company may require you to have private mortgage insurance. This is especially true if you weren't able to come up with a down payment that was 20% or more of the total house cost.
What Is Private Mortgage Insurance?
This insurance was created so that your mortgage company will get their money even if something happens to you that causes you to default on your mortgage. For example, if you lose your job and are unable to pay your mortgage payments, this insurance will take over to reimburse the mortgage company.
Who Pays For Mortgage Insurance?
You pay for the private mortgage insurance. It's part of your mortgage payment. Your premium is a percentage of the amount of your mortgage. Another variable when it comes to figuring out how high your mortgage insurance premium will be is how much of a down payment you were able to come up with. The smaller your down payment, the more your PMI premium is. The premium is just part of your mortgage payment so you don't generally have to come up with an additional payment.
Is It Possible to Get Rid of Private Mortgage Insurance?
Yes, you can get rid of your PMI after some time. It's not something that you can do right after you get your mortgage, but after you have created a record of steady payments and paid your mortgage down some, you can negotiate with your mortgage company.
There are some steps that you can do to help convince your mortgage company that you should be able to be rid of the private mortgage insurance. One of them is that you pay extra on each payment. If you pay a little extra each time, it adds up, Even a few dollars more each payment will cut down on your principal which cuts down on your interest. Paying ahead also helps you to build up equity in your house earlier. Building equity does all kinds of good things for you, including getting rid of your PMI.
Another option is to have your house reassessed. When that happens, the value of your house may go down. If that is the case, then your mortgage company may discuss dropping your mortgage insurance.
Getting your new house is exciting. In order to do that, you will need to get a mortgage, and you may have to get private mortgage insurance as well. Contact a lender, such as Doolin Security Savings Bank, for more information.
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