THE SCENARIO
Generally, when you buy a house and get a mortgage but put less than 20% down, you have to pay for Private Mortgage Insurance, or PMI. PMI is an insurance policy that you pay for, but which insures the lender, in case you default on the loan. In most instances, you can get rid of your PMI policy when you have a certain amount of equity in the property, but the exact terms vary for each loan.
Several years ago, I got a loan and put less than 20% down, so for those several years, I've been paying $308.72 per month* for the PMI policy. I recently inquired about what I would have to do to make the PMI go away (I would prefer
not to pay that money for someone else's insurance policy), and I was told that I would have to pay down the loan to 78% of the original purchase price of the house. I bought the house for $390,000,...
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