Conventional lenders usually require borrowers with less than 20 percent equity to obtain private mortgage insurance.
If you have less than 20 percent equity and currently pay for PMI, a home equity loan would raise your loan-to-value ratio and PMI premiums.
A higher loan-to-value ratio also means you would have to pay for PMI for a longer period of time.
If you have more than 20 percent equity now, a home equity loan could cause your equity to fall. You might have to pay for PMI plus home equity loan payments.
Talk to your lender about your current loan-to-value ratio and how a home equity loan could affect PMI payments.
