Get rid of PMI early

get rid of PMI earlyHave you thought about making additional principal payments on your home mortgage? Here are three benefits: building equity faster, saving interest and shortening the term on your fixed rate mortgage.

Just these items alone would be enough for you to justify paying the extra money. But there is also another huge advantage if you are paying private mortgage insurance or PMI. These PMI rates can vary however for a $200,000 mortgage you are paying an extra $75 to $200 a month.

Your lender is required to auto terminate the PMI when your principal balance on your mortgage reaches 78 percent of the original value of your property. But you need to keep an eye on this because sometimes lenders forget and don’t terminate the PMI in a timely manner.

If your down payment was less than 20 percent when you bought your home, then you were forced to take the PMI which can be expensive. But by paying the extra money toward your principal and getting it down quicker shortens the length of time in which you have to pay it. Getting rid of PMI can save you thousands of dollars over the life of your mortgage loan.

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