If you recently purchased a home with less than 20% down, your mortgage lender likely required that you carry Private Mortgage Insurance, or PMI. This $80-$200 fee tacked onto your monthly payment automatically drops off once your principal balance has been paid down to greater than 20%. Depending on your amortization schedule though, this might not happen until year 9 or year 10 of your mortgage.
Real estate values have been appreciating at such an incredible pace, chances are overwhelming that your home has appreciated beyond the 20% threshold, and you are now eligible to have your PMI removed, potentially saving you hundreds of dollars a month. In most cases you will not need to refinance your current mortgage, but you may be required to have a $400-$500 appraisal completed.
Contact your mortgage lender to see how they prefer to handle this. Tell them you believe your home has appreciated beyond the 20% loan to value ratio and that your PMI should be removed. If you want to be sure about your home’s value before you spend money on an appraiser, call us, and we’ll be happy to research your home’s value – at no cost – before an appraiser gets involved.