How to remove / cancel PMI from your Conventional Loan #mortgagetips #mortgageinsurance #pmi

How to get rid of, remove, or cancel your private mortgage insurance (PMI)? Conventional Loan edition.

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NMLS 103819/3152
Miles Pitcher - Superior Lending Associates, L.C.

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PMI (Private Mortgage Insurance) is a type of insurance that lenders require borrowers to pay when they take out a mortgage and make a down payment that is less than 20% of the home's value. PMI protects the lender if the borrower defaults on the loan.

There are a few ways to remove or cancel PMI:

Automatic Termination: Federal law requires lenders to automatically cancel PMI when the borrower's mortgage balance reaches 78% of the home's original value. This means that if you have been making payments on your mortgage for a while and your loan-to-value ratio has dropped to 78% or less, your lender should automatically cancel your PMI.

Request Cancellation: You can request to cancel your PMI once your loan-to-value ratio drops to 80% or less. You'll need to contact your lender and ask for a PMI cancellation request form. Your lender may require an appraisal to confirm the home's value hasn't decreased and that you still have sufficient equity.

Refinance: If you can't cancel your PMI through automatic termination or by requesting cancellation, you may be able to refinance your mortgage. If the new loan-to-value ratio is less than 80%, you may be able to avoid PMI on the new loan. However, refinancing comes with costs, so you'll need to weigh the pros and cons to determine if it's worth it.

It's important to note that if you have an FHA loan, you'll need to pay PMI for the life of the loan unless you refinance to a conventional loan or make a larger down payment.

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