Mortgage insurance

We had another good news today, a letter came in the mail that said that our mortgage insurance has been removed. Yay!

I don’t remember how much I mentioned on this blog. The story is that we could only afford to put a 10% down payment in our house when we bought it, but the prices were so low that it was advantageous to buy even though we’d need a pretty hefty mortgage insurance since we were putting less than 20%.

So sometime in February, our mortgage broker said the market had gone up enough that we could now refinance to get rid of the mortgage insurance. We went through all the paperwork and got an appraisal done. It came back and it was so high we now owned like 25% of the house, instead of some 15%. More than enough not to need mortgage insurance with the refinancing. Our rate would be higher than original though, plus we’d basically be throwing away 2 years of interest we’d already paid and starting a 30-year loan all over again. It was still advantageous to refinance… But just very barely.

Then I had the crazy thought to look at the terms of our mortgage insurance. If we now owned more of the house, could we just ask the bank who finances our loan to remove the mortgage insurance without refinancing?!?! A lot of mortgage insurances are bound by two variables: money and time. Like it would say they will drop the insurance if you own at least 22% of the house AND a minimum of five years have gone by. Of course they want to lock you into paying as much insurance as possible! Turns out though that ours did not have a time limit, just a minimum ownership percentage of 22%. So I called the bank and said we had the house appraised and we owned enough to removed the mortgage insurance. They told me that we have to have the appraised by a special bank appraiser. Of course. Argh.

So that meant the $500 we spent on the first appraiser was going to waste and we had to pay for another appraisal too. I guess I can’t be too upset, it was our fault for not having thought of checking with the bank first! And it the end, the extra expense was totally worth it because we got the insurance removed without refinancing. We are saving so much money compared to refinancing!! It’s not a huge difference per month, but it makes a huge difference when you don’t have to add those 2 extra years we would have to pay for if we refinanced.

Oh happy day! Now we can actually afford the house cleaner I hired a couple of months ago 🙂


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