Money Down the Drain

Mortgage insurance helps a lot of people buy a home with less than 20% down. That’s a good thing. But it isn’t cheap, and it doesn’t protect you. It protects the lender.

So once you own, a smart goal is to get rid of it as soon as you can.

Here’s how it generally works.

The basics by loan type

• Conventional loans: Usually require private mortgage insurance (PMI) when you put down less than 20%. It can often be removed once you reach enough equity, and it’s typically cancelled automatically at a set point.
• FHA loans: Carry a mortgage insurance premium. Depending on when the loan was made and how much you put down, it may last for years or for the life of the loan.
• VA loans: Don’t require monthly mortgage insurance.

Rules change, so ask your lender exactly what applies to your loan. Your monthly statement should show what you pay.

Ways to drop it sooner

If your home has gone up in value, your loan may already be below the threshold, and your lender can tell you how to request removal. Refinancing can also remove it if the new loan is under 80% of the appraised value, and sometimes it comes with a better rate. Whether it makes sense depends on rates, costs and how long you’ll stay.

A good first step is knowing your current value. Start with a home value estimate.

This is general information, not financial, tax or legal advice. Talk with your lender, CPA or attorney about your situation.

A simple plan for your mortgage insurance move

I’ve been helping people buy and sell homes across the west metro for about two decades, and I build and remodel luxury homes too. I’ll help you see both what a property is and what it could be.

Getting the house ready, or making it yours

If you’re selling and want repairs handled before buyers see them, Super Crew Contractors can give you an estimate. If you’re ready for something custom, Ivy Lane Homes does luxury home building and remodeling. And a quick coverage check with Intrinsic Insurance before closing can save you a surprise. For the local picture, read my Chaska homes guide or browse neighborhoods in Chanhassen and Victoria.

Your next step in mortgage insurance

Every move is different. When you’re ready to talk about yours, I’m a call or text away.

Please note: I don’t handle rentals or property management. I work with buyers and sellers, and that’s where I can help you most in mortgage insurance.

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