- PMI is typically required when you take out a conventional conforming mortgage and put down less than 20%.
- Your loan servicer must automatically drop PMI when your mortgage balance reaches 78% of your home’s purchase price.
- It’s possible to cancel PMI in other cases, such as if your home value has increased.
By law, your loan servicer must drop PMI when your mortgage balance is scheduled to reach 78% of the home’s purchase price. While it’s possible to request PMI removal when your home value naturally rises, there are other ways to go about it.
Here are some options to explore:
- Wait until you qualify. Your loan servicer must drop PMI when your mortgage balance reaches 78% of your home’s purchase price—as long as your loan payments are current and you’re in good standing with the lender.
- Request PMI cancellation. Instead of waiting until your loan balance reaches 78% LTV, you have the right to ask your servicer to cancel PMI once the loan balance falls to 80% of the original value of the property.
- Pay down your mortgage early. If you have cash to spare, you can pay more toward the principal balance to reach the 80% LTV threshold ahead of schedule. You’ll build equity faster and can save money on interest in the process.
- Make home improvements. Projects like upgrading appliances, remodeling a room, refinishing floors and making energy-efficient improvements can all add value to your home. If you think you’ve built at least 20% equity, contact your loan servicer to ask for the PMI cancellation.
Refinance your mortgage. If you’re thinking about refinancing, you can remove PMI if you’re close to the 20% equity mark. This option could make sense when mortgage rates are low.
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