To remove PMI, or private mortgage insurance, you must have at least 20% equity in the home.
You may ask the lender to cancel PMI when you have paid down the mortgage balance to 80% of the home’s original appraised value.
When the balance drops to 78%, the mortgage servicer is required to eliminate PMI.
Should I pay off PMI early?
By paying PMI you are reducing the bank’s risk. That is a good thing for you because it allows banks to make loans they otherwise may not have made. And they are able to make them at lower rates than they would have offered without mortgage insurance.
Can you pay off PMI upfront?
There is no upfront cost to this type of PMI, and no waiting period to cancel it via a refinance or lump-sum payment to your principal loan balance.
Can you buy out your PMI?
One way to get rid of PMI is to simply take the purchase price of the home and multiply it by 80%. Then pay your mortgage down to that amount. So if you paid $250,000 for the home, 80% of that value is $200,000. Once you pay the loan down to $200,000, you can have the PMI removed.
How long does it take to pay off PMI?