Here is a great, little-known tip. If you have mortgage insurance, you are paying to protect the bank. Mortgage insurance on a loan does absolutely nothing for you as the consumer, except make it easier for you to get a mortgage since it gives the bank less risk. If you have been in your house for at least three years, and you have mortgage insurance, call your bank and ask them to reassess how much you are paying for mortgage insurance. Depending on where you are with the value of your home and the amount of your mortgage, you should easily be able to get your mortgage insurance payment reduced.
It is important to note that you have to have had your mortgage for at least three years. The day that you hit three years though, you should make this call.
Why is this so great now? Because on average housing values have gone up 5% each year for the last three years. So without even taking into account compounding, there is a good chance that your mortgage is 15% less than your current home value. That means that if you put 5% down, you might even be able to get rid of mortgage insurance all together. 5% down plus 15% growth gets you the 80% loan to value that means you no longer need mortgage insurance. Even if you are only at 90% loan to value and previously you were at 97%, your payment will go down.
Don’t pay for something that gives you nothing. Reduce your mortgage with a phone call. (There could be a cost incurred from this if they want to do a new appraisal. The cost savings will kick in after a few months of your reduced payment.)
If you, or someone you know is looking to buy a home, sell a home, or invest in real estate, I would love to help. You can reach me at 515.639.0047 or RyanLynch@KW.com. Have a great week!