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Have you tried making extra payments to get your principal up from 10% to 20% sooner? That's the ideal situation for someone with more disposable income but les
by orky56 10y ago
Have you tried making extra payments to get your principal up from 10% to 20% sooner? That's the ideal situation for someone with more disposable income but less in savings (or doesn't want to tie up more saving in equity). The main thing to note is that you need to get up to 20% as quick as possible. That's because 20% is based on the current appraisal value of the property, not the purchase price. With Bay Area and other real estate markets appreciating so much, it's a ticking time bomb to get out of PMI.
- balls187 10y agoActually yes, that is what we're doing. We are (currently) making the equivalent of 1 extra mortgage payment a year, which should reduce the amount of interest that is paid over the lifetime of the loan. That, coupled with the increased value of the house since we've bought it, would help us remove the PMI payment. Doing the Maths, paying the extra 10% down, wouldn't save us much over the length of the loan where PMI applies, so we opted to make an extra mortgage payment instead.
- jdmichal 10y ago> That's because 20% is based on the current appraisal value of the property, not the purchase price. With Bay Area and other real estate markets appreciating so much, it's a ticking time bomb to get out of PMI. I think you have that reversed. If values are rising, you have to do less work to get to 80% LTV (loan-to-value). Example: I put $10 down on $100 worth of stuff with a $90 loan, giving a 90% LTV. If the value of stuff jumps to $120, then that $90 loan is now at 75% LTV, with zero payments made.