Removing PMI (Private Mortgage Insurance) from Loans

Some combinations of loan terms — such as a small down payment — may require the buyer to pay mortgage insurance. (See the video on Private Mortgage Insurance here to learn a bit more about it.)  PMI can add yearly costs to your mortgage, but you may not be required to continue carrying for the whole term of the loan.

If your loan was consummated after July 29, 1999, and your payments are current, you have some options.

  • Your lender must terminate PMI when principal balance is 78% of the original value of the home.
  • Your lender must terminate PMI if you reach the halfway point of hte loan term (e.g. 15 years on a 30-year fixed loan.)

You can request cancellation of the PMI policy yourself when principal reaches 80% of original value. Logically, that suggests that the lender didn’t cancel automatically, so if you’ve hit the 78% market, ask them in writing.

Consumers have the right to ask for the date that either of these balances will be in force.  If your mortgage is relatively new, ask for the date and put a followup note on your calendar or phone to check — even if it’s years in the future.

Follow any steps the lender requires, do everything in writing and keep copies.

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