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Private Mortgage Insurance

Martha Mullins, Realtor, Litchfield County, CT

If you took advantage of some great mortgage deals buying your home, you most likely also had to purchase Private Mortgage Insurance (PMI).

Most lenders require PMI if the buyer pays less than 20% of the purchase price at closing.  The purchaser must carry this insurance until 20% of the sale price of the home has been reached.  This could take five to eight years, depending on the terms of the mortgage.

Lenders are required to remove PMI when the property reaches 22%. So just keeping an eye on your payments and being proactive about notifying your lender can save you money.

If you make significant improvements that alter the value of your property, you may reach the 20% value mark faster than scheduled. An assessment would be necessary, but the savings would justify that cost.

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