Before filling out that home equity line application, consider getting rid of your private mortgage insurance (PMI). If you put less than 20% down on your home, chances are the bank charges you PMI every month - fees that could exceed a thousand dollars a year.

Most borrowers are able to get rid of PMI during the first few years of their mortgage. However, you may have difficulty if your home has a second mortgage or HELOC in place.

SeattlePI reports:

“Even if you have the equity, there are still some caveats. You must have a good payment history. That means you weren’t 30 days late in paying within a year of your request, or 60 days late within two years. The lender also can ask that you don’t have a second mortgage, such as a home equity loan, and reject your request if your loan is considered “high risk.”

Many HELOC borrowers don’t consider this qualification until it’s too late. Once the HELOC is opened, they may have to choose between cancelling their line and getting rid of PMI.

See Also:

How a HELOC Works

Is a HELOC Right for You?

Tags | Heloc, home equity line of credit