How To Cancel PMI

Added April 28, 2003 by Ilyce R. Glink

Print Articles

Summary: If you didn't put down 20 percent in cash on your home, you're probably paying private mortgage insurance, also known as PMI, and you're wondering how to get rid of it. A lender will be able to tell you what specific steps to take to cancel PMI. Lenders must automatically cancel your PMI once you've reached 22 percent equity based on your original home loan and sales price.

Wondering how to cancel your PMI?

If you didn't put down 20 percent in cash on your home, you're probably paying private mortgage insurance, also known as PMI, and you're wondering how to get rid of it.

Here's what to do. Start by contacting your lender. Ask if the lender has specific steps that must be followed when canceling PMI. Typically, you'll need to jump through several hoops before they let you drop it. You'll need to have your home appraised to make sure you've reached the magic 20 percent in equity. Expect to pay anywhere from $300 on up for that appraisal.

If you've built up the necessary equity, you'll need to send your lender a letter formally requesting that they drop PMI, and reduce your monthly payment.

A new law on the books requires lenders to automatically cancel your PMI once you've reached 22 percent equity based on your original home loan and sales price.

Lenders typically make the process of dropping PMI more cumbersome than it needs to be. Just be tenacious, and keep a copy of all correspondence. Sooner or later, your persistence will pay off, and you'll be able to start using your PMI savings to pre-pay your mortgage, or invest for your retirement.

See more articles on this topic by clicking on the "RELATED ARTICLES" above and to the right.

We have over 5000 articles on Real Estate Advice, Personal Finance Advice and Consumer Advice on our site. We encourage you to look at these articles. As always, if you have a comment on our articles, don't forget to post your comment below. We thank you for coming to ThinkGlink.com.

© Ilyce R. Glink. All rights reserved. This content may not be used, distributed, syndicated, compiled or excerpted in any medium or form without written authorization from Think Glink, Inc. For information on syndicating ThinkGlink.com please contact us.

Previous article Next article