Is It Time to Say Goodbye to PMI?

Private mortgage insurance, or PMI, may have helped you become a homeowner sooner by making it possible to buy with a smaller down payment. But as you pay down your mortgage and build equity, there may come a time when you no longer need it.

Think of PMI like that box of moving supplies that’s still sitting in the garage years later. It served a purpose, but it might be time to see if you can finally get rid of it!

Here’s the basic idea:
For many conventional mortgages, you may be able to request that PMI be removed once your loan balance reaches 80% of your home’s original value, provided certain requirements are met. PMI is generally scheduled to automatically terminate when the balance reaches 78% of the home’s original value, as long as the loan is current.

But your loan balance isn’t the only thing worth looking at. If your home has increased in value or you’ve made significant improvements, you may have built more equity than you realize. Depending on your loan and your lender’s requirements, an appraisal or other valuation may be needed to determine whether PMI can be removed.

A few things to keep in mind:

PMI rules vary depending on your loan type and circumstances.
Your payment history and current loan status may affect eligibility.
Your lender or loan servicer can tell you the specific requirements for your mortgage.
Some loans have different mortgage insurance rules, so the 80% and 78% guidelines don’t apply to every mortgage.

Why check? Removing PMI could lower your monthly mortgage payment, freeing up money for a home project, a vacation, or maybe finally replacing that appliance that’s been making “interesting” noises.

Not sure where you stand? Let’s take a look together. A quick mortgage check-in can help you better understand your current loan, how much equity you may have, and what options might be available to you.