Mortgage Insurance and No Hot Ladies Part II
Earlier this week we learned about mortgage insurance. And hot ladies. Today it’s time to dig a little deeper into mortgage insurance. I have no hot ladies for you today. Let’s deal with it and move on.
Here’s the thing. Getting mortgage insurance is easy, but how do you get rid of it? Is it like when people buy those giant tortoises that live to be, like, 200? And then the proud pet owner reads the leaflet that comes with the tortoise and is like, “Oh poop.” Next thing you know, the pet owner can’t even enter a nursing home when the time comes because nursing homes don’t accept giant tortoises, only cats.
The reason people want to get rid of mortgage insurance (MI) is because they’re only required to have it when the loan amount borrowed is over 80% of the home value. And eventually, the loan-to-value (LTV) will not be that high, because over time you pay down the loan. And just like the giant tortoise, there comes a time when it should go.
So here’s how you get rid of the ole MI:
The first way is to simply do nothing. Once your loan gets down to 78% of the value of your home (the value it was when you closed on your loan), then the mortgage insurance disappears. I believe large men in suits wearing dark glasses come pull the mortgage insurance from its bedroom in the middle of the night and take it to an abandoned warehouse. From there, it’s not your problem anymore so try not to think about it. You’ll just wake up one morning, at it’s gone. You should not feel guilty about the mortgage insurance’s fate, and try to move on.
The next way mortgage insurance goes away is like this. Let’s say you’ve been paying your mortgage and mortgage insurance for a while and you notice a shift in your neighborhood for the better. All of a sudden the “collector” (junkster) next door moves out and in moves a savvy remodeler. Then the folks across the street from you decide to start mowing their lawn and even paint their house. Then the home three doors down gets bulldozed over and up goes a mansion. Then another mansion. And, what’s this? They’re updating our park? I bet my home’s worth a fortune now!
If things like this start happening in your neighborhood and you have good reason to think your home value has increased, you can contact your loan servicer and request an appraisal. It’s possible that your home value has increased enough that the loan-to-value is such that you can drop the mortgage insurance. Each loan servicing bank has different rules, so you’ll contact them to find out what steps need to be taken.
It is entirely possible that I have literally bored you to tears and you sit weeping at your computer right now. I apologize. Sometimes they ask that I actually write about mortgage stuff here (lame) and I must comply. No worries – next week I’ll start standing up to them again and get back to writing nonsense.
Contact me if you’d like to chat with the ole Bosses about mortgage insurance, refinancing or buying a house, or giant tortoises. And subscribe on the right to boost my ego.