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dandg
LIF Zygote
Member since 1/06 46 total posts
Name:
Gerard
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Build up Equity or Pay down PMI?
I always have extra funds at the end of each month and usually prepay my principal balance and/or pmi. But I was wondering if it would be better to send the extra funds to build up my equity and pay down my principal or to pay down pmi first? Any comments? Thank you.
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Posted 5/6/06 9:21 AM  |
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MsG
Should be working
Member since 5/05 2824 total posts
Name:
G
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Re: Build up Equity or Pay down PMI?
I didn't know you could pay down PMI, I thought it was like an insurance bill until the equity is in the house.  This is a good question!
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| Posted 5/7/06 7:37 AM |
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-Lisa-
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Member since 5/05 6530 total posts
Name:
Lisa
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Re: Build up Equity or Pay down PMI?
how long have you been in your house? You may be able to eliminate the PMI altogether with an appraisal if you've been there for over a year or more.
do you think you have 20% equity in the house yet? from your downpayment, principal payments and the market value increases?
If you bought recently (within the last year) you probably do not, but with the way the market was increasing from 2000-2005, you may if you bought earlier...
Its worth looking into.
Message edited 5/7/2006 10:17:02 AM.
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| Posted 5/7/06 10:14 AM |
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charon54
My two boys!
Member since 5/05 7279 total posts
Name:
Rebecca
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Re: Build up Equity or Pay down PMI?
PMI is like an insurance policy. You can't pay it down, you might be able to pay ahead. It would not make any sense for you to do this though. You should pay towards principal.
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| Posted 5/7/06 12:17 PM |
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sophie78
LIF Infant
Member since 5/05 220 total posts
Name:
.
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Re: Build up Equity or Pay down PMI?
This might help....when we bought our house we put 10% down and then took a home equity loan of 10% so we did not have to pay PMI. Then 11 months after the purchase we paid off the home equity loan in one lump sum which gave us 20% equity. So we never actually had to pay PMI. I am not sure if this is what you mean.
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| Posted 5/7/06 12:46 PM |
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BabyBoy
is Skylar Elizabeth
Member since 5/05 4189 total posts
Name:
Tom
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Re: Build up Equity or Pay down PMI?
if you pay down you mortage to a point where your loan is 80% of the total property value, PMI drops off.. you can prepay PMI but you should invest that money into the mortage so you loan to value decreases....... Maybe after some time, the protery reapparises for higher and combo of paying principal payments will help get rid of PMI
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| Posted 5/8/06 10:48 AM |
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dandr10199
Grace is growing up too fast!
Member since 10/05 11561 total posts
Name:
Dina
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Re: Build up Equity or Pay down PMI?
Posted by BabyBoy
if you pay down you mortage to a point where your loan is 80% of the total property value, PMI drops off.. you can prepay PMI but you should invest that money into the mortage so you loan to value decreases....... Maybe after some time, the protery reapparises for higher and combo of paying principal payments will help get rid of PMI
I completely agree. This is our plan, to make extra mortgage payments. However, on the check memo write "principal only" on the extra payment. The bank might apply it to the interest if you don't specify when you want your extra payment to go.
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| Posted 5/8/06 10:51 AM |
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Re: Build up Equity or Pay down PMI?
Posted by am470
This might help....when we bought our house we put 10% down and then took a home equity loan of 10% so we did not have to pay PMI. Then 11 months after the purchase we paid off the home equity loan in one lump sum which gave us 20% equity. So we never actually had to pay PMI. I am not sure if this is what you mean.
We did the same thing- took out a home equity to supplement our DP so we didn't have to pay PMI. At the moment our goal is to pay off the HEL so we put extra towards that every month. Then we'll begin throwing more at the mortgage.
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| Posted 5/8/06 10:57 AM |
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