I purchased my home about 8 years ago and have been paying PMI ever since. I thought I read that after so many years, it drops off, or did I read that wrong? My mortgage, homeowners insurance, and PMI is $908 a month. I live 45 minutes from Nashville, TN, if it matters.
You have to write a letter to request it be removed.
How long do people usually pay the PMI? And what qualifies to have the PMI removed?
It’s not a time thing. You pay it until your loan-to-value ratio reaches 20%. You likely could have had it removed much sooner.
It’s insane that someone making the largest purchase of their life doesn’t understand this.
Depends on your loan type. For an FHA mortgage, you’ll need to refinance. For most other types, it depends on whether the balance of your loan is lower than a certain percentage of your home’s current value, usually 78-80%.
You pay PMI until about 20% is paid off, not until the loan-to-value reaches 20%. While PMI can be removed at around 80% LTV, some insurers require more than 20% removal. Some might require 22% to be paid off the original loan amount.
Once you hit 20% equity, you can ask to have PMI removed. It will automatically drop off once you hit 22% equity. For FHA loans with less than 10% down, PMI may stay for the life of the loan.
Honestly, I don’t remember what type of loan I have. I’ll have to go back and look at the paperwork.
PMI is a risk mitigation insurance for the lender when you put less than 20% down. It doesn’t care if it’s your first house or your tenth.
The real question is why didn’t you refinance when money was free?
My interest rate is 4%. Now it’s considered low; I can’t refinance without a higher interest rate.