If you originally purchased your home and paid less than 20% for a down payment, you more than likely started paying mortgage insurance as part of your mortgage payment.
The question, though, is are you STILL paying mortgage insurance- and do you still have to?
If you bought your home before 2013 with an FHA loan, you can request for your mortgage insurance to be dropped off once you hit a certain loan to value amount on your home. You have two options here- one is to compare the original purchase price of your home to your current loan amount- second is to have an appraisal done and compare that amount to your current loan. If you have at LEAST 20% equity, it can be removed!
For FHA loans AFTER 2013 or for other loans, the only way to remove mortgage insurance once you hit 20% equity in your home is to refinance your loan.
This can be a good or bad move, depending on your situation.
Will you be in your home at least another five years? It’s probably worth it. Will you be moving in the next few years? Probably NOT worth it.
Let’s use an example.
Say your house is worth $250,000. Your monthly mortgage insurance would be $200. Refinancing your loan would cost about $7,5000. Saving $200 a month, it would take about 3.2 years to break even.
If you’re staying in your home AT LEAST that long (or longer) this might be a great move for you- especially if you get a better interest rate! But conversely, if you get a worse interest rate or if it takes over four years to break even (from what you save on your mortgage insurance to what it costs to refinance your loan) it wouldn’t be worth it!
Want specifics on YOUR home? Just contact me here and I’ll help you figure out your options!
