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Emily and Ginger's Journey:

Say Goodbye to PMI!

This has been a good week for us. Ginger is recovering from her pneumonia, thank goodness! We also received great news on our home appraisal. If you read our blog from a few weeks ago, one of the first things we wanted to do was get our home re-appraised. When we purchased our home nearly four years ago, we did not have a 20% down payment. As a result, we have been required to pay for Private Mortgage Insurance (PMI) each month until our mortgage is lower than 80% of the value of our home. Luckily for us (or strategically), we bought our home in a desirable area so we knew the value of our home would continue to increase. So, we took the calculated risk of paying $325 for a home appraisal hoping the value of our home has increased enough that our mortgage reflects less than 80% of what we still owe on our home.  

The results are in! The value of our home has increased by 30% in just four years! Our mortgage now reflects 69% of the value of our home. As a result, we no longer have to pay for PMI each month. This is great news for us! Summit recalculated our monthly mortgage payment, and it is $65 less now that we don't have to pay for PMI. The $325 investment for a home appraisal will pay for itself before the end of the year, the long term savings is almost $4,000. 

If you own your home and are currently paying PMI, we highly recommend looking into this option. Just reach out to Summit's mortgage servicing department to ask when you are currently scheduled to reach the 20% equity milestone and what home value they are using to calculate that number. If you believe your home value has increased enough (Summit can also tell you what this magic number is for you), it might be worth spending the money for an updated appraisal. 

In other good news, we will be closing on our home equity line of credit this week with a secured interest rate of 2.49%. We plan to transfer our credit card debt (approximately $5,000 total) to the home equity line. We have two credit cards, and the interest rate is more than 20% on each card. Once the debt is transferred, our plan is to aggressively pay off that debt before the end of the year. The other part of the plan is to change our spending habits so that we are not carelessly purchasing things on our credit cards without being able to pay them off before the end of every month. We will then keep the home equity line of credit open just in case it’s needed down the road for future home projects.  

These new strategies for savings have all come with the help and support of our Project Money Coach, Cori. Thanks for all your help, Cori! What a great week it's been; we are looking forward to the next!


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