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.
