Savings Tip: Eliminate Your Private Mortgage Insurance

There are a great deal of people who are paying private mortgage insurance premiums every month that don’t need to be paying them anymore. The market value of real estate has definitely gone down the past two years, but many of you still have 20% or more equity in your home, which qualifies you to remove the private mortgage insurance from your mortgage. If you think this might be you, do the following:

1. Purchase an appraisal from a certified housing appraiser.
2. Calculate your home’s equity based on the amount of the appraised value. Divide the balance of your mortgage by the appraised value. If this number is less than .81, then proceed to the next step.
3. Contact the bank or mortgage company that services your loan. Explain to them that you received an updated home appraisal which shows that you now have 20% or more equity in your home, and ask them to remove the private mortgage insurance from your monthly payment. They will ask for a copy of the appraisal and possibly other documents to support its value.

Remember, do not order an appraisal unless you are fairly confident that it will appraise to an amount that would put you in the 80% or less range. These reports cost anywhere from $250 to $500, so I don’t want you throwing away your money. Do your research before ordering a report. You can visit websites such as Zillow.com to see their market value estimate for your home, and it allows you to see what comparable properties are selling for in your neighborhood.

Getting your PMI removed can save you thousands of dollars per year and shed quite a few dollars off of your monthly mortgage payment.

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