You can avoid PMI altogether by saving up 20 percent of the home’s purchase price for a down payment. When you pay 20 percent down, PMI is not required with a conventional loan. However, saving up for a down payment can be time consuming and difficult.
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Request to cancel your mortgage insurance once you have 20 percent equity in your home.
You must make the request, in writing, with your lender. Make sure your mortgage payments are current, and you have a good payment history before requesting your PMI to be canceled. To learn more about the requirements to remove your PMI, visit the Consumer Financial Protection Bureau. Otherwise, PMI will automatically drop off once loan to value ratio reaches 78 percent based on the initial property value.
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Get your home reappraised.
Did you purchase your home during a depressed market at an undervalued price, and now home values around you have increased? Have you added any rooms or significant remodeling that would raise the value of your home? If so, it may be worth considering getting a new appraisal, which may be higher now and allow you to reach that 20 percent equity threshold. Keep in mind that you are required to carry PMI for at least 24 months. After 24 months however, it is an option you may want to consider. Before you go this route, you need to speak with your lender, as dropping PMI through home appraisals is not always guaranteed. Your lender can help evaluate your options. Appraisals typically cost $300 to $400 and would need to be ordered by the lender if one is required.
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Search for special mortgage programs that are willing to wave your mortgage insurance based on your credit history.
Arbor Financial is currently offering a program with no down payment and no PMI for a limited time. Whether it be an initial home purchase or refinancing your existing mortgage, you could eliminate PMI.
$0 Down 30-Year Mortgage Special
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Loan terms of 7, 10, 15, 20, 25 and 30 years are available.
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Great rates and low closing costs.
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Easy application process with a quick response.
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Pre-approval process to help focus your house-hunting efforts.
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Rate locks, so you can secure your low rate.
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Access to someone local if you have questions about your loan.
