In these times of economic crisis, a lot of people scramble to save their homes. The task of saving ones home is not easy but there are ways to do away with some extra payments such as private mortgage insurance premiums. If you are one of those people who did not pay at least 20 percent down payment when you bought your home and were forced to get private mortgage insurance, don’t worry. You do not have to pay for private mortgage insurance protection premiums for life. Yes, you are allowed to cancel your private mortgage insurance coverage when you fulfill certain conditions. To help you get rid of your private mortgage insurance premiums, here are some tips for you.
Get Over The 20% Ownership Threshold
The best way to get away from paying private insurance premiums is to raise your equity on your home above the 20 percent level. Raising your equity over the property beyond the 20 percent threshold is very important. Once your equity on your home exceeds 20 percent, you are no longer required to maintain private mortgage insurance coverage.
There are three ways to raise your equity on your property. First, you can increase your down payment to exceed 20 percent. For instance, if the property that you want to buy is worth $200,000, you need to pay $40,000 which is equivalent to 20 percent of the total price is order to avoid paying private mortgage insurance premiums. Second, pay your monthly amortization religiously for several months and when you hit more than 20 percent ownership, you may cancel your private mortgage insurance coverage. This means that if your home is worth $200,000 and you have already paid about $50,000 which is roughly 25 percent of the value of your property, you may now cancel your private mortgage insurance coverage.
Third, you can have the value of your property reassessed to increase your equity. In other words, if the value of your property has increased over time, you may be able to cancel your private mortgage insurance coverage. Real property tends to appreciate with time so there is a big possibility that the home that you bought for only $200,000 dollars four or five years ago will now be worth about 20-30% of its original price. Improvements on your property can also push up the price of your home. To get some ideas as to how much is the current value of your property, get a new appraisal of your property.
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