How to Cancel Your Private Mortgage Insurance (PMI)
If you put less than 20% down when you purchased a home with a conventional conforming loan, you are paying an extra cost for mortgage insurance. This additional cost is commonly known as PMI or private mortgage Insurance. The good news is that there are things you can do to eliminate this extra cost! The requirements to cancel your PMI are a little complicated, but here is a quick summary.
Your PMI on a conventional conforming loan can be canceled if/when:
Your loan balance reaches 80% of your home’s original purchase price.
Your loan balance reaches 75% of your home’s current market price.
And your loan has been in place between 2-5 years.
If you have made significant improvements to your home that have increased its value, you can get the 2-5 year wait period waived.
The current market value of your home will be determined by a method chosen by your current loan servicer.
Lastly, if home values have appreciated and mortgage rates have dropped, it may make the most sense to refinance into a lower rate AND eliminate your PMI simultaneously.
If you purchased a home with an FHA loan after June 2013, your FHA mortgage insurance is permanent and, unfortunately, CANNOT be canceled. Furthermore, FHA mortgage insurance is expensive. So if your current loan balance is 80% or less than your home’s current market value, it may make sense to refinance into a conventional conforming loan to eliminate paying FHA mortgage insurance and perhaps improve your mortgage rate.
Bottom line
If you are paying mortgage insurance and would like to eliminate this expense, please call or email me, and we can determine if it is feasible and is the most appropriate strategy for you. I am available throughout the day, at night, and on the weekends.