How to Remove PMI From Your Mortgage Payment

by Lainie Petersen, Demand Media Google

    If you're looking to trim your monthly budget, check out your mortgage. If your down payment was less than 20 percent of your home's purchase price, chances are that you are paying premiums on private mortgage insurance (PMI). Once your equity reaches 20 percent, and you meet other requirements, you can ask your lender to cancel your PMI (cancellation is automatic for some mortgages when you reach 22 percent equity), saving you some serious dough.

    Step 1

    Call your mortgage lender and ask about their process for PMI cancellation. Federal law requires mortgage lenders to maintain a phone number that customers can call for information on canceling their PMI. You can't complete the process on the phone, but you can get the information needed to get the ball rolling.

    Step 2

    Write your formal request to cancel your PMI and send it to the address provided by your lender. When writing your letter, ask your lender to specify the home value needed to end your PMI.

    Step 3

    Arrange for a home appraisal, if your lender requires it. In some cases, your mortgage company gets to select your appraiser. In other cases, it is up to you to find an appraiser. You'll have to pay for the appraisal, so have your checkbook ready.

    Step 4

    Submit the completed appraisal to your mortgage lender. Your lender will review the appraisal and your payment history and notify you of its decision to cancel, or continue, your private mortgage insurance.

    Tips

    • Run the numbers before you request PMI cancellation. Make sure that your home equity is at least 20 percent. The value of your home may have increased since you bought it, so be sure to take that into consideration when you calculate your equity.
    • Don't ask for PMI cancellation if you've been delinquent in your mortgage payments. Lenders want to see at least a year's worth of regular payments before canceling PMI.

    Warning

    • Not all mortgages qualify for PMI cancellation. Federal law mandates PMI cancellation only for mortgages issued after July 29th, 1999. High risk loans, as well as certain government-backed mortgages, such as FHA and VA loans, don't qualify for mandated PMI cancellation.

    About the Author

    Lainie Petersen lives in Chicago and began writing professionally in 1989. She specializes in business writing, and manages Walmart News Now, a Walmart news blog. She also writes for "Saturday Morning Meeting," a television program for Walmart suppliers. Petersen holds a Master of Library and Information Science degree from Dominican University.