How to get rid of PMI

Do you have PMI on your current loan due to being unable to put down 20% when you purchased your home?  Now may be a great time to review this to see if you can request removal sooner than expected based on the appreciating housing market we have been in.  Think of what you could do with the monthly savings!

So how do you pursue this?  The first step is to obtain some data to see if there is a possibility that you have at least a 20% equity position based on the estimated value of your home.  Zillow and other sites will provide you with some estimated data.  You may ask your mortgage professional if they have any tools to assist with this (I do — ask me for a FREE Home Valuation Report).  If it appears that you may have enough value in your home, then the next step is to contact your loan servicer (to who you get your mortgage statement) to submit a removal request.

There is some risk before you take this action.  The lender/servicer will require that they facilitate an appraisal at your expense that supports the value needed for removal.  Any data points you have do not guarantee that an appraised value will be the same number needed.  The cost of an appraisal typically ranges around $600.00.  You would forfeit this if the report comes in with a lower-than-expected value.  

It is also important to ask your servicer about their policy for removal requests, as this may vary by investor/mortgage insurance company.  Some may require that a period of time pass, such as 2 years before you can submit a request.  There is also variance by loan type.  Conventional loans allow for the removal of PMI once you reach 80% Loan To Value.  FHA loans, for the most part, have mortgage insurance that is for the life of the loan.

Ask me about Homebot — a great resource for tracking the values of your real estate and building wealth through home equity — FREE from me to you.