If you have private mortgage insurance on your monthly payments, you’re going to want to hear what I’ve got to share today.
First of all, what is private mortgage insurance? Private mortgage insurance, or PMI, is an insurance policy that protects your lender whenever a person puts less than 20% down on a home purchase.
On average, PMI costs between $30 to $70 for every $100,000 of the amount you’re borrowing.
However, if you’ve gained an equity position at or above 20%, even if you didn’t originally put 20% down, there is a possibility you could get your PMI removed. This isn’t a guarantee, but there are some banks that will allow it. Given that PMI costs an average of $100 to $200, removing this extra expense could translate into significant savings.
“If you’re able to remove your PMI from your monthly payments, this could translate into significant savings.”
Another common question that arises regarding the subject of PMI is whether this expense is tax-deductible. I’m not a CPA, but the research I’ve done seems to indicate that you can deduct your PMI if you make an AGI net of less than $100 per year. Ultimately, you should speak with a CPA to determine whether you can deduct your PMI or not.
All of this being said, there are certain loan programs that allow you to put down less than 20% without taking on PMI. So, check with your lender to determine your options moving forward.
If you have any other questions or would like more information, feel free to give me a call or send me an email. I look forward to hearing from you soon.