PMI (private mortgage insurance) is the extra monthly cost lenders add when you put down less than 20% on a conventional loan. The good news is that it is not permanent, and getting rid of it can lower your payment.
Ways to remove it
- Request cancellation once your balance reaches 80% of the original value
- Automatic removal once your balance hits 78%, which is required by law on most loans
- A new appraisal showing your home gained enough value
- Refinancing into a loan with no PMI
Rising home values can help
If prices in your area have climbed, you may already have 20% equity even if you have not paid the loan down that far. A new appraisal can prove it and let you drop PMI sooner.
A note on FHA loans
FHA mortgage insurance works differently and often sticks for the life of the loan. For many FHA borrowers, the only way to remove it is to refinance into a conventional loan once they have enough equity.
Not sure how much equity you have now? We can run the numbers and tell you if you are close to dropping PMI.