walletcanvas walletcanvas
Search
  • Home
  • Wealth Solutions
  • Financial Planning
  • Mortgage
  • Insurance
  • Housing Finance
Reading: How to get rid of private mortgage insurance (PMI)
Share
Wallet CanvasWallet Canvas
Search
  • Home
  • Wealth Solutions
  • Financial Planning
  • Mortgage
  • Insurance
  • Housing Finance
© 2025 All Rights reserved | Powered by Wallet Canvas
Wallet Canvas > Mortgage > How to get rid of private mortgage insurance (PMI)
Mortgage

How to get rid of private mortgage insurance (PMI)

June 7, 2025 6 Min Read
Share
How to get rid of private mortgage insurance (PMI)
Agent talking to a couple in front of a laptop

FG Trade/getTyimages; Illustrations by Hunter Newton/Bankrate

If you cut your home under 20% with a traditional mortgage, you’re probably familiar with PMI or private mortgage insurance. This is a policy you must purchase to protect your lender if you default to your mortgage, and you usually pay premiums as part of your monthly mortgage payment, but it won’t last forever. Here’s how to get rid of it:

When will the PMI disappear?

The Homeowner Protection Act of 1998 (HPA) requires that a mortgage lender or servicer automatically cancel a PMI when the mortgage loan (LTV) ratio reaches 78% of the home purchase price, or after the loan period reaches 15 years on a 30-year loan.

How to get rid of PMI

  1. Wait for the PMI to auto or final exit.
  2. When your mortgage balance reaches 80%, you will request a PMI cancellation.
  3. Pay off your mortgage quickly.
  4. Refinance your mortgage.
  5. Recreate your home.

1. Wait for PMI to auto or final end

This is a handoff option. Wait until the lender or servicer cancels the PMI. Don’t forget that this will automatically occur when your mortgage balance reaches 78% of the home’s purchase price, or the first day of the month following the half of the loan term.

2. Request a PMI cancellation when your mortgage balance reaches 80%

The first option is most convenient, but if you wait for the lender to automatically cancel your PMI, you will pay more than you need. Instead, when the mortgage balance reaches 80% of the home purchase price, the lender can request that the PMI be cancelled earlier. Here’s how:

  • Make a written PMI cancellation request to the lender or servicer.
  • Be up to date with mortgage payments with good payment history.
  • Make sure there are no other liens in your home – for example, a second mortgage.
  • If necessary, get a household rating to ensure that the value of the home is not degraded.
See also  What is a No-Doc mortgage?

Assuming your payments are made on schedule, you can find a date when your loan balance reaches 80% on your PMI disclosure form. If you do not have this form, please request it from your servicer.

3. Pay off your mortgage early

If you have the budget, pay the principal an extra and you can hit 20% of your shares faster. To estimate how much you need to reach your mortgage balance, multiply the home purchase price by 0.80 to qualify for a PMI cancellation.

You can advance your mortgage in several ways, such as making biweekly or additional payments each year, or paying one lump sum payment at any time. Check with your lender or servicer to ensure that additional payments arrive at the principal of the loan, rather than the next payment or interest.

4. Refinance your mortgage

If your mortgage rate drops, refinancing to a new loan with a lower balance can help you reach the PMI cancellation window earlier. However, refinancing costs money, but it usually makes sense if you can lower your interest rates.

5. I’ll re-claim your home

Your home could reach 20% equity level prior to your mortgage payment schedule if you make a significant improvement due to a price increase or if you make a significant improvement that increased its value.

In this case, consider paying for a new valuation. If you have owned the home for at least five years and your loan balance is less than 80% of your new valuation, you can request a PMI cancellation. If you own a home for at least two years, your remaining mortgage balance must be less than 75%.

See also  What is a certificate of funds?

The rating usually costs several hundred dollars depending on the location and the characteristics of your property. Some lenders may be willing to accept the broker’s price opinion instead, but this is often a little cheaper.

Is it worth getting rid of the PMI?

When it comes to getting rid of PMI, you don’t have to be enthusiastic. Paying a PMI every month or as a temporary amount each year is not a monetary Joylide.

“Unless you’re taking out a FHA loan, you’re not married to PMI,” says Greg McBride, CFA, Chief Financial Analyst at Bankrate. “Once you achieve 20% equity cushioning, it could be a few years away in response to rising home prices. But don’t feel the need to use the last nickel of cash to avoid PMI and leave little financial flexibility behind.”

This can be especially true if you have purchased or refinanced a home within the past few years and have a low mortgage or refinance rate. It may be financially pointless to withdraw your money from valuing high yields and investments to pay off a relatively low-cost mortgage.

FAQ

TAGGED:Mortgages
Share This Article
Facebook Twitter Copy Link
Leave a comment Leave a comment

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

HOT NEWS

pexels karolina grabowska 4386367

7 Tax-Efficient Strategies to Build Long-Term Wealth in 2025

Tax efficiency plays a crucial role in building long-term wealth, but it’s often overlooked. Without…

April 5, 2025
What is the actual cash value of my car?

What is the actual cash value of my car?

If you need to know the market value of your car insurance to buy or…

March 17, 2025
Why American Express is not universally accepted

Why American Express is not universally accepted

Thomas Trutschel/ Getty Images If you're traveling abroad quickly, you American Express Card It may…

March 17, 2025
How to fill out FAFSA if your parents are same-sex partners

How to fill out FAFSA if your parents are same-sex partners

Tetra Images/Getty Images If you have same-sex parents, you have completed the FAFSA. It's easier…

March 17, 2025
City Double Cash: A great cashback card to pay off your debts

City Double Cash: A great cashback card to pay off your debts

Hispanoristic/E+/Getty Image City is an advertising partner. If you're looking for a way to reduce…

March 17, 2025
VA Rehabilitation and Renovation Loan

VA Rehabilitation and Renovation Loan

Alistair Berg/Getty Images What is a VA renovation loan? VA renovation loans are a type…

March 18, 2025

YOU MAY ALSO LIKE

Check up mortgage fees and hover near 7%

Images by PM Images/Getty Images. Illustrations by Hunter Newton/Bankrate Current mortgage fees Loan type the current 4 weeks ago 1…

Mortgage
June 12, 2025

What is short sales?

What is short sales? Short sale - sometimes known as a Pre-execution Sale - It's when mortgage lenders allow borrowers…

Mortgage
March 27, 2025

Best Mortgage Lenders in June 2025

I have a money question. Bankrate has the answer. Our experts have been helping you master your money for over…

Mortgage
May 31, 2025

Buy a mortgage without damaging your credit

Part of the home view-in process involves shopping with multiple lenders for the best possible Mortgage fees. But without a…

Mortgage
June 30, 2025
walletcanvas

Welcome to Wallet Canvas, where we bring clarity to your financial journey. Our mission is to empower individuals with the knowledge and insights needed to make informed financial decisions.

  • Wealth Solutions
  • Financial Planning
  • Mortgage
  • Insurance
  • Housing Finance
  • About us
  • Contact Us
  • Disclaimer
  • Privacy Policy
  • Terms of Service

Follow US: 

© 2025 All Rights reserved | Powered by Wallet Canvas
Welcome Back!

Sign in to your account

Lost your password?