How long will I have to pay mortgage insurance?
April 10, 2010 by
Filed under mortgage insurance
My wife and I did not put a down payment on our house so we have to pay about $65/mo in mortgage insurance. We have very good credit and have made all payments on time. When do we get to stop paying this? I thought I remembered 2 years, but I’m not sure.
when you build 20% in equity
Once you have 20% equity in your house you’ll be able to stop paying mortgage insurance. This can happen by paying the balance on the loan down or if your property value increases. It will probably going take several years (if the property value stays the same) seeing as much of the first few years payments going almost solely to interest and very little is applied to the principle balance unless you are paying extra.
Mortgage insurance is placed on a loan anytime it is over 80% Loan to Value (LTV) once you get below 80% the mortgage insurance will go away. When you have a loan that is more than 80% the value of the home it looks riskier to the lender. Make sure you keep on it because most banks will not just take it off…you have to tell them to!!
Congragulations on your new home! When your mortgage balance goes down below 80% compared to the value of your home is when you can SOMETIMES request that the pmi be dropped. You should have a document in your papers that you signed at closing telling you when your lender will allow you to do this. They usually have an automatic drop date, but it is after an insane amount of time (like 15-17 yrs). There are also some lenders that will not let you drop it even if the balance has dropped below 80%, if you haven’t been paying on it for a certain number of yrs, like around 5 yrs. Each lender is different, with different programs, so I would look through your paper work and then if you don’t find your answer, call your lender.
Home Owner’s Protection Act (1998)
http://library.findlaw.com/1999/Oct/1/131370.html