Five years ago, private mortgage insurance (MI) helped me and my husband buy the perfect house sooner than we otherwise could have. We put 10% down, said goodbye to our dingy apartment and moved into a little yellow bungalow.
Like all lenders, ours required mortgage insurance for a down payment of less than 20%. Could we have put 20% down and skipped the mortgage insurance? Maybe. But not without completely decimating our savings and contingency funds. For 2 neurotic over-planners who are in constant negotiations about how much is too much to pay for the Die Hard Blu-ray set, that wasn’t an option. (Yes, we still buy physical media – we’re OLD Millennials, okay?)
Or we could have bought a cheaper fixer-upper in a less desirable neighborhood – but we would have had to spend the money we saved on a second car and home repairs and upgrades. And as people who once spent an hour trying to figure out how to replace our windshield wipers, you can bet we weren’t going to DIY.
So for us, mortgage insurance was by far the best option. It allowed us to buy the turnkey house we wanted in the neighborhood we loved just one week after it went on the market. Plus, we wanted to lock in historically low interest rates while we still could.
And 5 years later, our mortgage balance is about to reach 80% of our home’s original value. Because of the Homeowners Protection Act of 1998 (HPA), that means we can ask our lender to cancel mortgage insurance. Sure, we could wait until our lender is required to cancel MI when we hit 22% equity – but remember the neurotic over-planning thing? That applies here, too.
So, mortgage insurance, thanks for making the last 5 years possible. Without you, I would have missed out on a lot:
- 5 years of watching Die Hard with the subwoofer on full blast
- 5 summers of grilling out in our own backyard (Pro-tip on grilled corn: Strip the leaves and silk from the ear. Slather on butter, salt and pepper, wrap in tin foil and grill for 20 minutes, turning a couple of times. Guaranteed delicious every single time.)
- 5 years of having 2 levels, meaning I don’t have to be thisclose to my husband at all times (love you, honey)
- 5 years of making home improvements when and where we choose (okay, so after one disastrous shelf installation debacle, we didn’t choose to make many other improvements, but we do have the choice)
- And, oh yeah, 5 years of home appreciation and equity-building
We had a good run, mortgage insurance. I’m grateful for your help, but it’s time to part ways. And with the extra money in my pockets each month, I can buy an awful lot of corn.