your best bet is to reach out to the lender, ask another person and ask if you can do an appraisal based removal of the PMI policy or reach out to the insurance company directly. However you are not protected by the Act and are dependent on the lender's generosity.
Remember: You might be able to eliminate PMI when your home value rises or when you refinance the mortgage with at least 20 percent equity. But the onus is on you to request it.
There is no way to remove FHA PMI without refinancing. You have to refinance to conventional and the next lender will make the choice to require PMI or not. Also keep in mind they have slightly different names.
There are three cancellation situations: automatic, by request, or final termination. In all cases, the property's “original value” refers to the appraised value of the home, at the time of the current loan origination.
Get an Appraisal
Many lenders (like Fannie Mae) also require a two-year “seasoning requirement,” meaning you can't have PMI removed until you've made two years' worth of on-time payments—even if your equity has grown above 20%. If it's been less than five years, you might even be required to have 25% worth of equity.
If the mortgage insurance was financed at the time of origination and is canceled prior to its maturity you may be entitled to a refund if the refundable option was chosen at the time of origination. However, if there was no refund/limited option, this would negate any option for a refund.
The Bottom Line: Removing PMI Can Help Ease Your Financial Burden. Mortgage insurance gives many home buyers the option to pay a smaller amount upfront for their downpayment. However, it increases the monthly payment until you're able to remove it.
Generally, once you reach 20% equity or when you pay your loan balance down to 80% of the purchase price of your home, you can request that your lender or servicer remove PMI from your monthly mortgage payment.
However, MIP is specific to FHA loans and is required for all borrowers, regardless of their down payment, while PMI is associated with conventional loans and can typically be removed once the homeowner builds enough equity. FHA PMI removal is technically impossible as FHA loans come with MIP.
If you've paid the principal balance below 80% of the home's original value, PMI can typically be removed. This process involves getting a new appraisal to determine the home's current value and ensuring it meets the lender's requirements under the Homeowners Protection Act.
Determining equity is simple. Take your home's value, and then subtract all amounts that are owed on that property. The difference is the amount of equity you have.
You typically have to pay PMI until you reach 20% equity in your home, at which point you can typically request cancellation. Additionally, your lender may be required to cancel PMI once your mortgage balance reaches 78% of the original home value, or 22% equity.
Request PMI removal: You can request the cancellation of PMI once your LTV ratio reaches 80% of the property's original value or lower. You may have to submit a formal request to your loan provider, along with documentation such as proof of home value and a solid payment history.
To begin filling out a PMI cancellation letter, you must first provide the lender with your name, address, loan number, and contact information. Then, explain the reason for your request for PMI cancellation. Depending on the lender, you may also be asked to provide documentation to support your request.
Improvements are most likely to be considered substantial if they cost or add value in an amount equal to the balance you have left to pay down on your loan to reach 80% of your property's Original Value.
You can't cancel your PMI until you have at least 20% equity in your property. Continue to make payments on your loan each month. Divert any extra money you have coming in toward your principal to build equity faster.
The Act, also known as the “PMI Cancellation Act,” addresses homeowners' difficulties in canceling private mortgage insurance (PMI)1 coverage. It establishes provisions for canceling and terminat- ing PMI, establishes disclosure and notification requirements, and requires the return of unearned premiums.
4. Stay in your home at least five years. For most homeowners, it takes around five to 10 years to build up 15% to 20% of home equity.
If you can afford it, putting 20% down on a house is ideal. It helps you avoid private mortgage insurance (PMI), reduces your loan amount, and lowers monthly payments.
Legislation making PMI tax deductible was passed in 2006. It applied the deduction to policies issued in the 2007 tax year going forward. The measure has been periodically renewed, but expired after the 2021 tax year. Currently, PMI is not deductible for the 2022 or later tax years.
PMI is not deductible like interest, so it generally makes sense to get rid of it. It shouldn't change your property taxes significantly, just the usual annual update.
You can remove PMI, or private mortgage insurance, from your mortgage after you have established enough equity in your home. You will need at least 20% in equity. At that point, you can request to have it removed or wait for it to automatically drop off when you have 22% in equity.
To request cancellation of PMI, you should contact your loan servicer when the loan balance falls below 80 percent of your home's original value (the contract sales price or the appraised value of your home at the time it was purchased).
You pay for PMI as part of your monthly escrow payment. That means in addition to paying your property taxes and homeowners insurance into your escrow account, you also pay your monthly PMI fee into the escrow account as well.