PMI, also known as, private mortgage insurance, is to protect the lender in case the borrower stops making payments on their loan. Typically you’re required to have it if your down payment is less than 20%. How much does private mortgage insurance cost? The answer: it varies. It’s contingent upon how much your down payment is and your credit score.
So, now that you know what PMI is and approximately how much it will cost, how do you get out of paying for it? VA loans (these are for qualified veterans) are typically exempt from PMI. The other way to avoid PMI is to refinance and use the equity and increased value of the home to put you in that category of owing 80% or less on the loan.
How does the refinance work exactly? The Denver market is one of the hottest in the country right now. How does that affect you, the homeowner that isn’t trying to sell, but wants to eliminate PMI? With the market as hoppin’ as it is, home values are rising like crazy. Thus, the odds of your home being worth more than what you paid for it is fairly high. If you refinance with us, the amount of equity that you have already paid, plus the increase in home value could potentially qualify you to eliminate your PMI. Not sure if you fall into this bucket? Give us a call today and we’ll help answer your questions!