Rising property values mean many homeowners may have enough equity in their home to refinance and reduce or remove their private mortgage insurance (PMI) or mortgage insurance premium (MIP).
That could save hundreds of dollars a month. Plus, you may also benefit from a lower rate, shorter term and more.
Start your application
What is mortgage insurance?
Mortgage insurance protects the lender against any loss if you fail to pay your monthly mortgage payments.And while it doesn’t provide any protection for the borrower, it does give you the option to make a down payment of less than 20%. You’re typically required to make these monthly premium payments until you meet certain financial conditions for your loan type.
PMI vs. MIP
PMI is typically required on conventional loans with a down payment of less than 20%. It’s paid as part of your monthly mortgage payment. MIP is the mortgage insurance that’s required on Federal Housing Association (FHA) loans regardless of your down payment amount.
Learn how to eliminate mortgage insurance
When does mortgage insurance go away?
PMI is required until your loan has met certain conditions, like having 20% equity in your home based on it’s original value. Once your home reaches 20% in equity, you can contact your lender and request that they cancel your PMI. If your payments are current and in good standing, your lender is required to cancel your PMI on the date your principal loan balance is scheduled to reach 78% of the original value of the home. You can calculate your loan to original value (LTOV) by dividing your current unpaid principal balance by the purchase price of your home or the appraised value at closing, whichever is less. Depending on your new loan amount and your home’s value, you also have the option to refinance to get rid of PMI.
For FHA loans, MIP is required for either 11 years or the entire length of the loan, depending on the terms of the loan. Another option is to refinance from an FHA to a conventional loan to eliminate MIP.
Getting rid of PMI or MIP is just one of the many benefits of refinancing your mortgage. You can also benefit by changing terms, lowering your interest rate or monthly payments and getting access to cash for major purchases.
Should I refinance my mortgage
Is refinancing right for me?
Refinancing your existing home loan can be a great way to save money and help secure your financial future. With today’s rising home values, homeowners may be in a unique position to reduce or eliminate their mortgage insurance. Refinancing may also allow you to consolidate a second mortgage or other high interest debt to a lower rate and/or longer term. Let U.S.Bank give you a free mortgage checkup to show you what’s possible.
Take the next step.
Start of disclosure content
Disclosures
Loan approval is subject to credit approval and program guidelines. Not all loan programs are available in all states for all loan amounts. Interest rates and program terms are subject to change without notice. Mortgage, home equity and credit products are offered by U.S.Bank National Association. Deposit products are offered by U.S.Bank National Association. Member FDIC.
Equal Housing Lender
