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Every month I overpay my mortgage.

Only a fraction goes to reduce the debt–most goes to taxes, escrow, and PMI.  An extra payment here, ten dollars there. It all adds up in the end. I’m not close to paying it off yet but I’m hoping to be close to the time when I don’t need PMI.

Most people need “private mortgage insurance” if they owe more than 80% of the value of a loan. In my case,  I need it until I owe less than 78% according to the terms of my loan. I figure I must be getting close. I really wanted to know how much I’d save, so I called the bank.

Ursula answered. I asked my question. She passed me to someone else. He looked into my account and said he thought I was a month or two away from being paid up to that point, in which case I could apply to drop the PMI.

He put me on hold again. “Yes. You can drop it in another $1300.”  Give or take that much.  Dropping PMI–which gives the bank money if default on my mortgage–saves me $211.78 a month.

The answer: $211 a month. And, I’m about a month away from being able to drop it.

“Once you pay that extra principal amount, call back and ask to apply to have it dropped.”

I asked. “Doesn’t it drop automatically when it gets below the number?”

“No,” he said. “Yours is scheduled to drop off in April 2021.”

What happens to that money?

Hear me on this. The mortgage company can automatically take my payment. They can automatically tell me if I were ever late. And, they can automatically generate tax notices. But they can’t automatically stop charging mortgage insurance when I hit a certain value of the loan?

“Who gets the money if I don’t apply to have it dropped?” I asked.

“The insurance company.” the rep said. “This doesn’t benefit you at all. Don’t forget to call. It drops the month after you do.”

The insurance company gets the premium. If I default on my mortgage, the bank gets the insurance benefit. I get nothing and nobody has the incentive to remind me. They’d collect my premium for 26 extra months.

That’s $5506.28.

I’m sure it’s on page 765 of the mortgage agreement in .05 font print.

$5506.28–That’s six dollars more than the roof I just discovered I needed ten years early Isn’t it funny how things work? I’m not going to pay for the roof with the money I’m saving. I’m going to pay down the mortgage quicker. But still, life balances out pretty well.

Even though I had to sit on hold for 15 minutes and the hold music was horrible, the return on investment for sticking with the call… so worth it.