30
Jul
By Mike Pfefferman
Personal Finance

How to Remove PMI Without Refinancing

Private mortgage insurance, or PMI, is often required when a homebuyer makes a down payment of less than twenty percent. While PMI helps lenders reduce risk, it adds extra cost to your monthly mortgage payment. The good news is that you may be able to remove PMI without refinancing your loan. Understanding the options available can help you save money and accelerate building equity in your home.

Understand When PMI Can Be Removed
Federal law, specifically the Homeowners Protection Act, requires lenders to automatically cancel PMI once your loan balance reaches eighty percent of the original home value. You can also request cancellation when you believe you have reached this threshold through paying down the loan or if your property has appreciated in value.

Request PMI Cancellation Through Your Lender
If you have built equity to at least twenty percent of the home’s original purchase price, you can formally request that your lender remove PMI. To do this, you typically need to submit a written request and may have to prove the home has not declined in value. Your lender may require a home appraisal to confirm current value.

Use Home Appreciation to Your Advantage
If your property value has increased significantly since purchase, you might qualify for PMI removal sooner. A professional appraisal can demonstrate this increase in equity. Keep in mind that lenders generally want to see that you have at least twenty percent equity in the home before canceling PMI.

Make Extra Principal Payments

Consider Loan Recast if Available
Some lenders offer loan recasting, which recalculates your monthly payments based on your current loan balance after a lump sum payment. While recasting does not remove PMI by itself, lowering your principal faster can bring you closer to that twenty percent equity goal.

Stay Informed and Keep Documentation
Keep track of your loan balance, home value, and payment history. Staying informed empowers you to know when you are eligible to request PMI removal. Document all communications with your lender to avoid misunderstandings.

Consult Your Mortgage Professional
Every loan and lender may have different rules regarding PMI removal. Working with your mortgage expert can help you understand your specific loan terms and options. They can guide you through the process and help you make decisions that save you money.

Removing PMI without refinancing is a smart way to reduce your monthly expenses without the cost or hassle of a new loan. By monitoring your equity and staying proactive, you can enjoy greater savings and faster progress toward full homeownership.

15
Apr
By Mike Pfefferman
Personal Finance

Smart Strategies for Building an Emergency Fund

Life is full of unexpected expenses, from medical bills to car repairs and even job loss. Having an emergency fund in place can help protect you from financial stress and prevent you from relying on high-interest loans or credit cards. If you don’t already have one, now is the perfect time to start building your safety net.

Why an Emergency Fund Matters
An emergency fund is a dedicated savings account meant to cover unexpected expenses such as:

  • Major home or appliance repairs
  • Car repairs or replacements
  • Unexpected medical bills
  • Job loss or reduced income

Without savings, many people turn to credit cards or loans, which can lead to more debt. An emergency fund provides peace of mind and financial stability when life throws a curveball.

How Much Should You Save?
Financial experts recommend saving three to six months’ worth of essential living expenses. This amount ensures you have enough funds to cover necessities if you lose your income or face a major expense. If that goal seems overwhelming, start small—any savings is better than none. The key is to begin and build over time.

Steps to Build Your Emergency Fund
1) Determine Your Savings Goal
To figure out how much you need, calculate your monthly expenses, including:

  • Rent or mortgage
  • Utilities (electricity, water, internet)
  • Groceries
  • Insurance (health, home, auto)
  • Car payments and transportation costs
  • Credit card or loan payments
  • Childcare or medical costs

Multiply that total by three to determine a three-month emergency fund goal, or by six for a more secure six-month fund.

2) Set Up Automatic Deposits
One of the easiest ways to save is to automate the process. Set up an automatic transfer from your paycheck or checking account into a separate savings account. This ensures consistency and removes the temptation to spend the money elsewhere.

3) Save Small Amounts Consistently
Even small contributions add up over time. Simple ways to save include:

  • Rounding up purchases and transferring the spare change into savings
  • Setting aside a percentage of each paycheck
  • Cutting back on non-essential expenses and redirecting that money to your emergency fund

4) Use Unexpected Money Wisely
If you receive a tax refund, work bonus, or other unexpected cash, consider saving a portion of it. Large lump sums can give your emergency fund a significant boost.

5) Keep Your Fund Separate and Untouched
It’s important to distinguish between emergency savings and other savings goals. While it may be tempting to dip into your fund for a vacation or new gadget, keep this money reserved strictly for true emergencies. If possible, open a separate account to prevent easy access.

Building an emergency fund takes time and discipline, but even small steps will help you create financial security. By consistently saving, automating deposits, and keeping your funds for true emergencies, you can protect yourself from unexpected financial stress and gain greater peace of mind.

14
Jun
By First Rate Financial Group
Personal Finance

Five Things to Do With a Windfall Other Than Spend it Right Away

Five Things to Do with a Windfall Other Than Spend it Right Away

Perhaps you have won the lottery, received an inheritance, or cashed in one of your investments, and now you have a large sum of money you don’t know what to do with.

Although it is tempting to cruise around town in a brand new sports car it is important to think carefully about how to spend your newfound cash.

To give you some ideas on the smartest way to use your new wealth, here are five things to do with a windfall other than spend it right away:

1. Erase Your Debt

Your new found money will allow you to clear up all of your debts, which will lift a huge financial burden off your back and give you a lot of freedom. Start with the debts with the highest interest first, such as your credit card debts.

2. Create an Emergency Fund

Calculate how much money you would need to cover your living expenses for 6 months. Take this amount off your windfall and place it into a savings account. This money will be your fail safe. In case of an emergency, such as you hurt yourself, become ill, or lose your job, you will have enough money to live comfortably until times get better, without having to go into debt.

3. Invest in Your Home

If you spend your windfall on a renovation for your home, there is a good chance that you can increase your property value enough to make it more than worth it. Talk to estate agents in your area to determine which type of home improvement will increase your home’s value the most, but usually kitchens and bathrooms are the best rooms to update.

4. Buy a Vacation Property

Consider putting your newfound wealth into a holiday home overseas in a popular destination. You will be able to enjoy lounging on the beach there, and when you are not using it you can rent out the home to tourists to cover the costs. Later on in life when you want to retire, you will always have the option of moving there!

5. Live Off the Interest

If you won a million dollars in the lottery, you could spend it right away on a huge house and a car and then have nothing left. Or, you place it in an investment account and have it earn 6% annually. At this rate you would have approximately $5,000 per month or $60,000 per year without ever touching your initial sum. You could easily live off this amount and never have to work again.

These are a few ideas of what you could do with your money if you are lucky enough to receive an unexpected windfall.

Do you have any other ideas of how you could use your windfall?