Are you paying Mortgage Insurance? Have you purchased a home and were not able to come up with 20% down to avoid paying mortgage insurance? If so I may be able to offer some insight as to how to potentially lower your payment by removing the MIP (Mortgage Insurance Premium).
You may be asking what is Mortgage Insurance? Well if you were not able to come up with 20% of the purchase price when you bought your home, the lender would have required you have a mortgage insurance premium added to your payment as a form of added insurance on the amount they were lending you. The type of mortgage you have will dictate the method or process to remove the MIP. Below are the two common types you would be dealing with.
If you have an FHA Mortgage The only way to remove the MIP (Mortgage Insurance Premium) is to refinance. FHA mortgages do not automatically remove this for you. It is solely up to you. Many people never give it another thought. They will end up paying far more then they need to throughout their ownership of the home. This is where I can help you.
Follow these steps.
- Contact your realtor (ME: Jackie Mihalchick) to do a local market analysis on your home to see if the value has gone up enough since you purchased it.
- If your value has gone up, the next step is to contact your mortgage holder or a lender to see about the cost and process of refinancing. If you do not currently have a lender, I can help you with that as well.
- The next part in the refinancing process is deciding on a term and new interest rate.
- Once those things are decided upon the lender will order an appraisal. After the Appraisal comes in at value you will sign papers and close on the new loan.
- When the loan has been closed you will now just have what is often called a PITI payment (Principle, Interest and Tax Payment) no longer MIPITI payment (Mortgage Insurance Premium, Principle, Interest and Tax Payment).
If you have a Conventional Mortgage With this type of mortgage, you have some options on how to get rid of the Mortgage Insurance Premium. The best is to always call your mortgage holder and see what they suggest. Typically you have a few options.
Below are some simple steps you can take to make the process a bit easier and most efficient.
- Contact your Realtor (me) and have a new market analysis on your home completed. This will let you know what your current value is on your home and can save you time and money should you need to go the route of an appraisal.
- Do nothing and wait it out. The conventional mortgage allows you to wait it out. Once your (LTV) loan to value reaches 80/20 on the original amortization schedule it will automatically drop off. This is a nice feature of the conventional loan however in the long run you are probably paying the extra premium longer than you have to.
- Look at your current property taxes. If the assessed tax value reflects an 80/20 value then you can call the mortgage holder and ask them to remove the MIP portion of the payment.
- Call the lender and let them know you would like to remove your MIP. They may require an appraisal only, or that you Refinance (which requires an appraisal). Refinancing does risk losing out on a really low interest rate, so it is always smart to have your lender run the numbers for you.
Hopefully this was a bit insightful. I am not a Mortgage Lender and am not sure of all the requirements, however I think it helps to understand that you do have some control over your payment. Let me know if you would like more information, or if I can connect you with one of the trusted lenders I work with.
Jackie Mihalchick Intuitive Realtor Birdsong / Katz RE Group