I'm so happy to finally be able to write this article. I have finally achieved a 78% Loan to value ratio to remove my private mortgage insurance on my home! I never wanted to be saddled with the PMI when I first purchased my loan. I ended up in a bidding war and had to pay a little extra to get the home of my choice. I'm going to be explaining why I'm so excited to finally be able free myself of this extra payment each month.
With this new goal achieved, I will free up $44.80 Capital per month which annually adds up to be a whopping $537.60 per year! This is a substantial amount of money I will be saving monthly. Instead of spending this money every month on a useless Insurance, i'm going to be able to save this extra payment still since I'm used to spending it already it reinvestment it right into my Independence Fund.
Setting Up my Own Personal Escrow
Every time I talk to people about how I'm choosing to pay my own property taxes and home owner insurance they ask me if I'm worried I wont be able to save that money every month. Its a common situation that happens to people that have issues with managing their money. They will all of a sudden have extra money every month once they no longer are required to make their escrow payment. This is a scary thought for someone who is not frugal with their money every month and consistently living pay check to pay check.
I will still have to pay my yearly property taxes and home owners insurance premiums to remain a resident in my home. In order to assist with my new plans of not having to even think about making my yearly taxes, I'm going to be setting up an online savings account with Ally Bank and set up a direct deposit amount to automatically be deposited into the account every month.
By choosing this method, I will not only be able to have more control over my money, but I will also be able to earn interest on my funds as they sit in my savings account in waiting to pay my taxes. If anyone hasn't noticed yet I think I some control issues when it comes to my money? I really enjoy having control over my Funds and being able to access and allocate them as I see fit. As before when I paid money into my escrow every month, the money was gone and I was not able to have any liquidity with it.
I have already calculated what my monthly home owners Insurance premium is every month and what I will need to have saved by the time my summer tax bill comes around. With home insurance and taxes I will need to roughly save $340 a month or $170 per paycheck. This is awesome news to me also since I will only have to pay the $523.79 Principal and interest payment per month. One of the biggest things I love about Ally Bank is that they pay a 1% interest rate which is compounded monthly! now, 1% is not a lot of money but remember, this is 1% that I wasn't earning before and every dollar counts for something.
This is just one more step that I'm taking closer towards my Financial Freedom. I will be able to have more control over my money while also reducing my required monthly payments. This will definitely help with my debt to income ratio which, will further enable me to save more money into my Independence Fund.
By finally riding myself of PMI it is just another way of looking at it as giving myself a pay raise! This year has been one of the best financial experiences I have ever had and I'm truly excited to continue on this journey towards Financial Freedom. Slow and steady wins the race and man let me tell you, I'm very patient and Diligent.
How has everyone else's month been? Has anyone freed themselves of any monthly debt?
I have not received any payments by any parties mentioned for this article. The views and opinions are purely from my own experiences and no benefit has been provided to me from Ally Bank. This is not a promotion or referral but merely a system I use which I find Superior to other banks.
Image courtesy of 2nix at FreeDigitalPhotos.net