Ready to get rid of your private mortgage insurance (PMI)? Your mortgage servicer is required to honor your PMI removal request for free when your mortgage balance reaches 78% of the home’s original purchase price, or the mortgage hits the halfway point of the loan term, such as the 15th year of a 30-year mortgage. You may be able to get rid of PMI earlier by asking the mortgage servicer, in writing, to drop PMI once your mortgage balance reaches 80% of the home’s value at the time you bought it.
PMI Removal Requirements
To justify your request, you’ll need the following:
- A good payment history. No payments 30 days late in the past 12 months and no 60-day late payments in the previous 24 months. Timely payments are necessary when it comes to getting rid of PMI. Late payments can label you a high-risk borrower, making it harder to cancel.
- No other liens. Your mortgage must be the home’s only debt, including second mortgages, home equity loans, and lines of credit.
- Proof of value. An appraisal, at your expense, to prove the home’s value hasn’t fallen.
Since property values continue to rise in Collin County and Denton County, it is possible to request early cancellation based on your home’s current value. Your home may also have increased in value if you’ve done any home improvements. A current appraisal will establish what your home is worth now.
Before ordering an appraisal, it’s important to check with your mortgage lender, as some lenders require borrowers to use certain appraisers. Others may accept a broker price opinion. Also, to cancel PMI based on the property’s current value, you must have owned the home for at least two years and have 75% loan-to-value (LTV). If you’ve owned the home for at least five years, you can cancel at 80% LTV. This information applies only to private mortgage insurance for conventional loans. The rules are different for mortgage insurance for government-backed mortgages such as FHA loans.
If you meet your lender’s requirements for PMI removal, contact Stafford Appraisals to request an appraisal of your home. With 25+ years of experience, Stafford Appraisals has the knowledge required to assign a fair market value to your house. To learn more about PMI removal, visit the Consumer Financial Protection Bureau, a US government agency that makes sure banks, lenders, and other financial companies treat you fairly.