Thus far, 2020 has been a bit of a whirlwind. If you’ve found yourself in a position where money is tighter than usual this year, you are certainly not alone. Cutting expenses is a natural response to such conditions, and your mortgage is likely your biggest expense of all. As such, in this blog we provide advice for reducing your mortgage premium whether you are about to close or are already in the middle of your payment term.
Pay Off Entire Premium at Closing
To avoid monthly premium payments, many homebuyers choose to pay off the entire premium at closing. This often ends up being cheaper than increasing the down payment to 20% to avoid the need for a mortgage insurance premium altogether. Additionally, if your seller offers a credit to pay closing costs, you could always put it toward the mortgage insurance premium.
Partially Pay Off Premium at Closing
Paying off the entire premium up front may seem a little daunting. The good news is that any money you put up front toward the premium will help you in the long run. The larger the lump sum toward your insurance premium, the lower your recurring monthly payment will remain in the years that follow.
Refinance Your Home
If your home value is on the rise and mortgage rates are low, refinancing your home may even allow you to eliminate your mortgage premium altogether. The reasoning here is simple: a home appraisal will be required as part of the refinancing process. From there, if your loan balance is 80% or less than the appraised value, you do not incur new PMI. Even if your balance still ends up being greater than 80% of the new value, you will still benefit from being that much closer to 20% equity.
Reduce Your Mortgage Premium with Clearview Realty
Clearview Realty helps home buyers in Colorado, Florida and California understand the different types of mortgages that are available and provides loans to help people achieve the dream of homeownership. Since the specifics of which mortgage to choose is dependent on a variety of factors, we encourage you to call us for more information and find out which is right for you. Our number is (720) 217-5731, or you can send us a message.