Eliminating Mortgage Insurance Might be a Good Reason to Refinance

November 30, 2021

Many home buyers need to get monthly mortgage insurance when they buy their house. Mortgage insurance is required when you put less than 20% down. It protects the lender from early default on a loan. Mortgage insurance automatically goes away once the loan to value goes to 78% through amortization (your payment history), not appreciation.

As we all know, housing prices have shot up in many parts of our area over the last 18 months. At the same time, rates are still historically low. By refinancing your loan to lower their rate, you may be able to eliminate your mortgage insurance because the value of your house has increased. So while a lower interest rate might not be enough to justify a refinance, eliminating your mortgage insurance could add up to significant monthly savings.

If you have monthly mortgage insurance as part of your mortgage payment, this could be a good time to say goodbye to that part of your payment. Let us know if you'd like a referral to a reputable mortgage broker who can run these numbers for you.