fbpx

How to Remove Your PMI Without Refinancing

how to remove your pmi

Are you tired of paying for private mortgage insurance (PMI) every month? You’re not alone.

Many homeowners are looking for ways to remove their PMI and save money on their monthly mortgage payments. The good news is that there are a few options available to help you get rid of your PMI without having to refinance your mortgage.

Today, I’m going to show you how to remove your PMI without refinancing, so you can keep more money in your pocket each month.

What is Private Mortgage Insurance (PMI)?

Private mortgage insurance is a type of insurance that protects the lender in case you default on your mortgage payments. It’s usually required if you have less than 20% equity in your home, and it can add hundreds of dollars to your monthly mortgage payment. PMI is not to be confused with homeowners insurance, which protects you in case of damage or loss to your property.

What is the process of removing your PMI without refinancing?

First, you’ll need to contact the servicer of your mortgage. This is the lender that you make your payments to. You will want to speak with one of the customer service representatives and formally request for cancellation of your PMI and provide evidence that your loan to value has reached 80% or lower. This can be done through a recent appraisal, statement showing extra payments made towards the principal balance, or any other documentation requested by your lender. Once approved, you should see a reduction in your monthly mortgage payment

What is the timeframe to remove your PMI without refinancing

The whole process should take less than 3 weeks.

It’s important to note that every lender may have their own specific requirements and procedures for removing PMI. It’s best to contact them directly and inquire about their process.

Keep in mind that even if you do remove your PMI, there may be other fees associated with it such as an appraisal fee or processing fee. Be sure to factor these costs into your decision-making process.

Remove your PMI if your home value increaes

If your home value increases, you may have more options to remove your PMI without refinancing. You can request a new appraisal or use a current appraisal that shows the increased value of your home. If the LTV ratio is now below 80%, your lender may approve the removal of PMI.

However, make sure you check with your lender first because often times, even if you have enough value in your home to remove your PMI, the lender may first require that you have your mortgage for at least 1 or 2 years. You will also be required that you have shown an on-time payment history as well.

How to remove the FHA PMI

FHA loans also require PMI, but their process for removal is different.

If you have an FHA loan and made a down payment of less than 10%, you will be required to pay for PMI throughout the entire term of the loan. However, if you made a down payment of 10% or more, then after 11 years, your PMI will drop off automatically.

However, most FHA borrowers are not eligible to request a removal of their PMI simply because their Loan to Value reaches 80% or less. For the most part, refinancing into a conventional loan is the only way to remove PMI on an FHA loan.

So, how can you remove your PMI without refinancing? Here are some options to consider:

By making a larger down payment

One way to avoid PMI altogether is by making a larger down payment when purchasing your home. If you put down 20% or more, you won’t be required to pay for PMI. This may not be a feasible option for everyone, but it’s worth considering if you’re still in the process of buying a home.

Request a PMI cancellation

If you already have PMI on your mortgage, you can request to have it cancelled once you reach 20% equity in your home. This means that your loan-to-value ratio (LTV) has dropped to 80% or less. Keep in mind, though, that this is not an automatic process and you’ll need to contact your lender to initiate the request.

Make extra payments

Another way to reach the 20% equity mark faster is by making extra payments towards your mortgage. This will help you pay off the principal balance of your loan quicker, thereby increasing your equity and potentially reaching the 20% threshold sooner.

Improve your home's value

You can also try to increase the value of your home by making improvements or renovations. This may not be a quick solution, but it could potentially increase your home’s worth and lower your LTV ratio.

Get a new appraisal

If you believe that your home’s value has increased significantly since you purchased it, you can request a new appraisal to prove this to your lender. If the appraisal shows that your LTV is now below 80%, you may be able to cancel your PMI.

So, how can you remove your PMI without refinancing? Here are some options to consider:

A loan is eligible for PMI cancelation when all the below criteria are satisfied:

The loan-to-value ratio (LTV) has reached 80.0% of the original value of the loan.

  • The original value of the loan is defined as the lesser value of the purchase price and the original appraised value
  • The LTV is calculated by dividing the unpaid principal balance (UPB) by the original value
  • If the LTV has not reached 80.0%, there is the option to pay down the loan. The borrower can request the amount from the MI department of their servicer to ensure the accuracy of the pay-down amount.

 

The property has increased in value 

The lender will use any of these to find out if there is sufficient value to cancel PMI:

  • Automated Valuation Model (AVM) that is at no cost to the borrower
  • If an AVM is not available or does not reflect a sufficient value and an interior and exterior BPO or appraisal is required (at the borrower’s expense) to certify the value of the property has not declined in value.

 

A good payment history has been maintained.

  • A good payment history is defined as no payments 30 or more days late within the last year (12 months) and no payments 60 or more days late within the past 2 years (24 months)

 

In conclusion, removing your PMI without refinancing is possible, but it may require some effort and patience. Consider all of your options and weigh the potential savings against any additional costs.

We can help you understand whether or not you are eligible for PMI removal without refinancing or assist you in exploring other options that may be available to you. Contact us today to learn more!

Other posts

first time home buyer First Time Home Buyer

First-Time Homebuyers: Essential Tips for a Smooth Mortgage Experience

Purchasing property is a pivotal process, particularly for ...
Read More →
Home Purchase

A Home Guide to USDA Loans

Table of Contents Add a header to begin ...
Read More →
Buy a House Home Purchase

Why Right Now Is the Best Time to Buy a House

Have you ever dreamed of owning your own ...
Read More →

Get the best rates and service for your mortgage