For many homeowners, they can’t wait to get rid of their mortgage insurance (Who wouldn’t want $300 to $400 per month back in their pocket each month?). According to the Homeowners Protection Act of 1998, mortgage insurance is automatically removed when the loan is reduced to 78% of the original purchase price.
There are two ways to reduce the Loan to value to 80%, amortization and price appreciation.
Lets take a look at an Amortization Example:
Lets compare a $300,000 purchase price, 30 year fixed rate, 4% interest rate, with 5%, 10% and 15% down payment.