How You Can Remove Your PMI

You might be able to remove your private mortgage insurance.

With property values increasing so quickly, we need to talk about private mortgage insurance, or PMI. PMI is the insurance that’s taken out on your loan when you put less than 20% down. It covers the lender for the difference between 20% and your down payment in the event of a foreclosure.

There are a couple of different types, but the two biggest ones are FHA and conventional. For most FHA loans, you won’t be able to get rid of the PMI unless you refinance. If you have PMI on a conventional loan, chances are that your home’s value has increased enough to be able to remove that PMI.

At a designated date, your private mortgage insurance will drop off. It’s usually based on when you hit an 80% loan-to-value ratio. However, you can request that the PMI be taken off early. Most lenders require that you hit at least a 75% loan-to-value ratio, but with how home prices have increased, many people should still meet that mark. Removing your PMI is worth it if you can.

“It’s worth checking to see if you can remove your PMI.”

You don’t have to refinance, but your lender will probably require that you pay for an appraisal. They might allow you to order a broker price opinion instead, which is about half the price of an appraisal.

Let’s say the value comes in, but you’re a few thousand dollars short of the 75% loan-to-value ratio. You can choose to write a check, pay your loan down by the difference, and remove that PMI. Private mortgage insurance is a monthly expense, so it might be worth it.

If you’re paying private mortgage insurance, it’s worth checking to see if you can remove it. If you’d like some help with the process, I’m happy to lend a hand. Just call or email me. I’d love to answer any of your questions.