If there is one “worry” that thousands of working people carry with them every day it’s this: How do I get rid of debt? Most people don’t do anything at all or do far too little to get themselves out of debt. But those who do take serious action focus on specific debt and have a definite plan for getting back to square one.
One of the debt types that people deal with is private mortgage insurance (PMI) debt. As you learn how to get rid of private mortgage insurance (PMI) debt you should feel less “weight” and pressure from this additional obligation.
Buy a Dream Home?
It’s common knowledge that the best way to buy a home is to pay 20 percent of the purchase price up front – the down payment. But many people can’t do this and don’t want to wait until they can save this amount. So they go ahead with the mortgage. What PMI does is pay the bank if and when the homebuyer can’t make payments. The mortgage insurance company pays during foreclosure.
The cost of private mortgage insurance is usually about half a percentage point. For example, when you have a $200,000 mortgage PMI might cost about $100. It may be a good idea to get rid of private mortgage insurance (PMI) debt by increasing your equity in the home. While it may seem like a small amount, the way out of debt often involves starting with the “minor” amounts and working up to the larger amounts.
Why Eliminate PMI Debt?
The obvious answer to this question would be that PMI is designed to protect the bank or other lender. There are really no benefits to the borrower over the long term. Getting rid of PMI debt starts with preventing it altogether. Borrowers should do all they can to come up with 20 percent as a down payment so they aren’t required to purchase this insurance.
You may be able to get rid of PMI debt by canceling it according to your contract. Start by talking with your loan officer or representative of the lender. Tell them you are interesting in canceling the private mortgage insurance. You may have to get a new appraisal of your property to determine what your equity status is.
In some cases you may have to take legal action against the lender, if they don’t agree to cancel the PMI debt according to the mortgage agreement. Start by writing a letter yourself. Be firm and state your intentions. If this doesn’t get the process started you may have to get assistance from an attorney who can guide you through the court process that will get your PMI canceled.