How To Get Rid of PMI


When buying a home with less than 20% down, home owners run into PMI, or private mortgage insurance.  While mortgage insurance can be paid in various ways, from a split premium to “lender paid” (lender paid PMI results in a higher interest rate), the most common form of PMI is monthly, borrower paid PMI.  With this type of PMI, a borrower will pay a monthly payment that goes toward PMI.  This payment is included within the monthly mortgage payment.

While some mortgage loan products (like FHA) often have permanent PMI, others (conventional loans, for example) have PMI that is temporary, lasting for a certain number of years or until a certain level of equity is reached.

Since PMI doesn’t offer any real benefit to home buyers or home owners (except the very real benefit of being able to put less than 20% down – it’s important to remember, without PMI, low down payment options wouldn’t exist!), it’s best for a borrower to get rid of PMI as quickly as possible.  This can be done in a variety of ways; naturally through home appreciation, paying down a loan’s principal balance, or the combination of both!

For homeowners with some time in their home, it’s always a good idea to keep track of equity position – once you’ve accumulated 20% equity, you may be able to get rid of your PMI (many lenders will require you to carry your PMI for 2 years with an on time payment history).  To track your equity, one option is to sign up for our FREE home and market monitor – if you’re not already tracking your equity, sign up here for free!


With no action, PMI will eventually go away on it’s own, but it may take much longer than if you try to get it removed through your loan servicer.  If you’ve had 24 on time payments on your mortgage, and believe you have 20% or more equity in your home, you should call your loan servicer (the company you make your payments to) and ask about the process to remove PMI.  Most servicers will require a form to be completed, and you may need to have an appraisal done as well.  In many cases, the servicer will require that they be the one to order the appraisal with payment being made by the home owner to cover the cost of the appraisal.
Another option to get rid of PMI is to refinance your mortgage.  If you have an FHA loan, refinancing may be the only way to get rid of PMI, and for conventional borrowers, it’s important to determine if a refinance makes sense (we can help, just ask!) before pursuing that route.  But if you once had less than 20% equity in your home, and when you refinance you have 20% or more equity, your PMI should be removed with your new loan.

Buying a home and want to avoid PMI?  Are you a home owner looking to ditch your PMI?  Give me a call at 484.680.4852 and I’d be happy to show you strategies to save you money, get rid of (or reduce) PMI costs, and ensure you’ve got the right loan.  Our goal is always to maximize your financial position and avoid you paying extra money to a bank or insurer.