PMI stands for Private Mortgage Insurance, and it is required on mortgages with a loan-to-value ratio greater than 80%. For example, if your home was worth $100k at the time of closing, and you owe more than $80k on the loan, you are required to have PMI.
I got my annual PMI disclosure tonight, and it says that if I’ve had my loan for at least two years, and have a good payment history for at least two years, I am eligible to cancel my PMI.
It’s not a lot, mind you. But I’d love to save the ~$70/mo it costs. That’s a fifth of vodka and a bag of CBD gummies, every month.
Yes, because presumably you’ve shifted that balance of loan to value significantly enough that you’re much less of a risk. You have. A lot more skin in the game after 2 years.
the first like 10 years of payments is mostly against the amortized interest, so in the first 2 years the principal owed barely moves down.
Which is why on a 30 year home loan, even adding an extra $150 a month to paying your principal down will literally shave a decades worth of payments off.
Yes, money you will completely lose if you default.
What, the interest? You lose that money, default or not.
The value you can get from selling it down the line will more than cover that interest. You only really fuck yourself either that cost if you see the mortgage through to maturity.
I called one day to see how close I was to being able to remove PMI and the rep said “eh, you’re close enough… I removed it, you’ll see your updated amount on your next payment”.
I was surprised how easy it was.
A large part of your consideration to let you drop it will be how close you are to paying off 20% of the loan’s value. If you’re over 15% and with that history, you’ll have a better chance.
I strongly recommend not disclosing that you intend to use the monthly savings on vodka and gummies
Also, if your home appreciates so that the equity is more than the 20% down payment on your loan would be, you might be able to stop paying it.
Some states the mortgage company has to give you your PMI payments back starting after the house was appraised at the higher value.
I like how I’m analyzing this as if I’ll ever fucking own house or even almost approach being able to produce a down payment for one.
Literally called my bank right after seeing this post and they waived it on the spot. The official contract provision was not until 80% LTV but this was excellent advice!
Thanks, OP. I’ll raise a glass to you when I spend my extra $75/mo!
