On Tuesday, I wrote about the relative worth of mortgage insurance. For some, it is a welcome expense; for others, it is a needless expense best avoided. But for those who go the mortgage insurance route, it is usually not very long before they want to get rid of that extra monthly insurance payment.

To get rid of the mortgage insurance you need to do one of two things: refinance your mortgage to a mortgage without insurance or wait the appropriate amount of time and for enough equity to build in your home to request the removal of the insurance. I’ll start by explaining the second option, as that is the more complicated one. With FHA mortgages from before June 3, 2013, you will be able to eliminate the insurance once you have over 20% equity in the home and you have paid 5 years worth of insurance. Conventional loans with mortgage insurance have similar requirements. If you have an FHA loan established after June 3, 2013, you will never be able to drop the mortgage insurance.

Unless, of course, you refinance the mortgage. With as little as 10% equity in the property, you can refinance your house and eliminate mortgage insurance. So if you bought your house in the greater Detroit area in the last few years, you may now have the equity you need to refinance just from the gains in the housing market. You will have to meet the credit and income qualifications for a traditional mortgage, but assuming you do it is one of the easiest ways to lower your monthly payments.

If you have any questions about mortgage insurance or how to get rid of it, please contact me. If you have anything to add about mortgage insurance, please leave a comment.