-
Step 1
Pay a down payment of 20 percent of your home's value. If you have at least this much as a down payment (and it may very well be worth saving for your down payment for a few extra years in order to have enough) you will avoid paying private mortgage insurance (PMI) on your home loan.
-
Step 2
Get a first mortgage that is only 80% of your home's value. Make up the difference with whatever down payment you have combined with a second loan for the remainder. That way, you will avoid paying private mortgage insurance on the loans.
-
Step 3
Pay extra toward your mortgage each month to pay down your principal more quickly so that you can have your PMI removed sooner, if you are already in a loan with private mortgage insurance. Once your mortgage crosses the 80% of appraised value line, contact your bank to go through the process to have PMI removed.
-
Step 4
Negotiate with your potential lender to avoid paying private mortgage insurance even if your loan is for more than 80% of the house's value. If the bank needs your business, and you have a good credit score, you may get a waiver. Deal locally or with manual underwriting if possible.
-
Step 5
Refinance your home with a lender who does not require private mortgage insurance. Do the calculations, including any interest rate changes and closing costs, to make sure this is a profitable decision. If you only plan to stay in the house for a couple years, it probably won't be worth it.













Comments
FUSILLI1OF4 said
on 7/27/2008 Interesting and educational article. 5*
3-Point said
on 7/26/2008 Excellent Information!
vikki9 said
on 7/26/2008 Good to know. Thank you.
mattlee said
on 7/25/2008 great advice
luv2blog said
on 7/22/2008 Good tips. Thanks.