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How to Save Money on Your Mortgage Payment: Dropping PMI and Handling Escrow Shortages


Hello, I’m Josh High, a broker at Swift Home Mortgage, and welcome to our blog where we aim to provide valuable information to help you save money on your mortgage payments. Today, we’ll be discussing a couple of ways to reduce your mortgage payment, especially for realtors who can share this knowledge with their clients. We’ll cover how to drop Private Mortgage Insurance (PMI) and handle escrow shortages.

How to Drop PMI from Your Mortgage Payment

PMI or Private Mortgage Insurance is required for conventional loans when the borrower puts less than 20% down on the property. According to a study by the National Association of Realtors in April 2022, nearly 46% of people put less than 20% down when they bought their house. This means they likely have PMI attached to their payment.

To remove PMI from your mortgage, you don’t have to refinance your mortgage. Instead, you can contact your mortgage servicer and request to drop PMI if you meet certain criteria. They might ask for an appraisal, a drive-by appraisal, or use an Automated Valuation Model (AVM) to determine the current value of your property. If your loan is less than 80% of that new value, they’re required to drop your PMI.

To get the process started, you can either call your mortgage servicer or send them a detailed letter. Sending the letter to their Qualified Written Response Unit can be more effective and ensures they respond within a specific time frame.

Refinance Options if Needed

If you do want to refinance, a Cash Out refinance might be an option to consider. This can help you get more money out of your property for debt consolidation, home projects, or other purposes. However, it’s crucial to ensure that refinancing makes sense considering current interest rates.

Escrow Shortages and How to Handle Them

Escrow shortages can happen when property taxes or insurance premiums increase. If you’re facing an escrow shortage, there are a couple of tips to lower the impact on your mortgage payment:

  1. Call your servicer and ask them to spread the escrow shortage over 36 months instead of 12. This will help lessen the burden on your monthly payments.
  2. If you have the cash available, you can send a check directly to your escrow account to cover the shortage. This allows you to maintain your regular mortgage payments.


In conclusion, understanding how to drop PMI and handle escrow shortages can help you save money on your mortgage payments. If you have any questions or need assistance, feel free to contact us at Swift Home Mortgage. Don’t forget to like and subscribe to our YouTube channel for more valuable information on managing your mortgage.

Thanks for reading, this is Josh High with Swift Home Mortgage, and we look forward to helping you with your mortgage needs.

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