How to Eliminate Private Mortgage Insurance

Having to obtain private mortgage insurance is sometimes an unpleasant fact of home ownership. It does not protect you, the homeowner, but rather the lending institution. Fortunately, you should not be locked into this arrangement forever and may be able to avoid it altogether.

Things You'll Need

• Mortgage
• Credit report
• Computer
• Internet

Instructions

1. The most obvious way to get out of the clutches of private mortgage insurance is to try to put 20 percent of the home's value down. Ask your realtor, financial advisor, mortgage lender, bank or mMortgage broker.

2. If you have been paying private mortgage insurance for a few years, check with your mortgage lender or broker to see if you can refinance the mortgage and, if possible, get an interest rate 1/2 point or more lower than you are currently paying.

3. If you are not sure how much equity you have built up in your home, look at your latest mortgage statement. You can then compare how much you owe with your home's approximate value.

4. Another option is to take out a home loan for 80 percent of the value and then one or two home equity loans (depending on your down payment).

Tips & Warnings

• Typically, it is not necessary to have a firm 20 percent down to purchase a home. Each situation is different.

• Try to avoid taking cash out of a refinancing arrangement, as this will reduce your equity.

• Consult with a financial advisor for more information.