So, having a solid idea of your home’s value and how it’s changed can help you track when it might be time to ditch the PMI. But a simple hunch won’t be enough to get your lender to remove it. You’ll need to get an appraisal or another official valuation of your home (more on that below.)
In light of low interest rates, an increasing number of homeowners have decided to trade their old mortgage for a new one, a process known as refinancing. Refinancing activity rose 33% in the first half of 2021, compared to the last half of 2020. Sometimes, a refinance is also a good opportunity to check on your LTV and see whether you qualify for PMI removal.
If, based on the home’s appraised value, you have at least 20% equity, then the second that that loan closes, the new loan starts without private mortgage insurance from the start, shares Richie Helali, a mortgage expert with HomeLight Home Loans.
5. You’re midway through your loan’s term.
If you are up to date and current on your PMI payments, then the lender must terminate PMI the month after you reach the midpoint of your loan’s amortization schedule, according to guidance from the CFPB.
If you’re midway through your loan’s term, this PMI termination applies even if you have not reached 78% of the original value of your home.
Read more4. You eliminate PMI when refinancing your home
