Because Linda has at least 10 percent equity—but not yet 20 percent—she's eligible for refinancing. "I want you to refinance the home immediately for a 30-year fixed rate mortgage," Suze says. "When you have less than 20 percent to put down, normally you have to pay something called PMI, private mortgage insurance. What I want you to do, however, is if you have at least 10 percent equity in the home, you can purchase your PMI up front. It is usually 1 percent of your mortgage amount."
Linda needs a mortgage for $180,000. "I think that's great. I do. It will cost you 1 percent, or $1,800, up front to get rid of PMI. You have now converted from an adjustable rate floating mortgage to a fixed rate mortgage," Suze says. "Your payments on $180,000 at today's interest rates are going to be about $1,100 a month."