I recently met up with Charley Farley, branch manager at Merrimack Mortgage, to talk a little bit about private mortgage insurance and how homeowners can get rid of it.

Private mortgage insurance (or PMI) comes in different varieties. For example, you pay it as a one-time funding fee for a VA loan. With an FHA loan, you would pay a monthly mortgage insurance premium. With a conventional mortgage, it’s just PMI. It’s defined as the fee the borrower pays when they buy a home but don’t put a full 20% down.

In some instances, you can get rid of PMI and not have to pay it anymore. With the VA loan, it’s all paid at once in the funding fee, but with FHA loans, the PMI lasts for the life of the loan. The only way to get rid of PMI on an FHA loan is to sell the property, pay off the mortgage, or refinance the home.

It’s easy to get rid of PMI on a conventional loan. Call the number on your mortgage statement and speak to a customer service rep and demonstrate that you’ve fulfilled three requirements.
 “It’s relatively easy to get rid of PMI on a conventional mortgage.”
You have to demonstrate that you’ve made payments on time, you’ve made at least 24 payments, and that you have 20% equity in the property. A Realtor can help you verify whether you’ve got 20% equity in the home to save money on an appraisal. Otherwise, that appraisal could cost $400 to $500.

This topic came from a really good question posed by Dave Alphonso, and since we selected it, we’ll send Dave a $25 gift card.

If you have any questions about mortgages or financing for Charley, you can reach him at (603) 471-9300.

If you have any questions for us about buying or selling a home in New Hampshire or about real estate in general, give me call or send me an email. I’m always happy to help!