How To Get Rid Of PMI

Private Mortgage Insurance, also known as PMI, is something that many people don’t want to have (but can’t avoid) and they want to get rid of it as soon as possible, especially since it means that their monthly payment will go down and that they have a sizable amount paid off on their home.

Mortgage lenders will require you to pay PMI if you made a down payment of less than 20 percent, which is common for many homebuyers. This insurance is wrapped into the cost of your monthly mortgage payment.

What Is PMI?

The PMI reimburses the lender if you stop making payments on your home. Private lenders and mortgage companies take a risk loaning out large sums and the PMI is added insurance to help cover any financial loss on the lenders end should you default on your loan.

Legally, your mortgage lender is required to break down your payments to show the number of years and months it will take for you to reach the point of having adequate equity in your home to drop the Private Mortgage Insurance. This is beneficial for the buyer in many ways. It provides a timeline of payment expectations and a realistic goal for dropping the PMI. It also provides an estimated timeframe to begin the pro