Maine Refinance Loans – Refinancing to Get Rid of PMI

Maine Refinance Loans – Refinancing to Get Rid of PMI

Mortgages rates in Maryland are comparatively low, and homes are appreciating quickly. This combination may be just what you need to get rid of costly private mortgage insurance (PMI).

Why You’re Paying PMI

PMI is a sort of insurance policy for lenders that guarantees that they will be able to recoup their money should you default on a loan. If you finance more than 80 percent of the value of your home with a traditional loan, you will almost always be required to pay PMI premiums. Unfortunately, PMI is a waste of your money. This insurance does absolutely nothing to protect you. Getting rid of PMI as soon as possible will be to your assistance.

Why a Maryland Refinance Loan Can Help

If your home has appreciated in value like many of the other homes in Maryland, the amount you owe may have dropped below the 80 percent mark. Unfortunately Fannie Mae and Freddie Mac policy dictates that once you have PMI, you must keep it for at the minimum two to five years in spite of of appreciation values. One way to get around this rule is by refinancing. When you eliminate your old loan, you can get a new loan without PMI.

Other Options

If Freddie Mac and Fannie Mae do not control your home loan, you may be able to dump PMI and avoid refinancing with a simple home appraisal. If the appraisal shows that your home has increased in value enough, your lender may allow you to drop the PMI without a refinance. If that isn’t a possibility, or if your home has not increased in value at all, you can try refinancing into an 80/20 loan. Also known as a piggyback refinance, this option allows you to have two loans on your home without any PMI requirements.

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