How Do I Get Rid Of PMI On My Mortgage?

Question

I purchased a home about a year ago and I had to get PMI. The PMI payment is about $100 a month extra on my mortgage payment. I sure could use this money, how can I get rid of PMI?

Answer

Unfortunately, getting rid of PMI - aka Private Mortgage Insurance or Mortgage Insurance Premium (if you have an FHA loan) is a process that does take some time. In my opinion it is a racket, but it does serve its purpose. See GetPreQualified.com's articles on PMI - What is and why you need PMI? and PMI Types if you have any questions about PMI.

How To Get Rid Of PMI

1. Pay down your mortgage more than 20% from the original balance and your mortgage company must remove the PMI if you have gone beyond your 2 year point with having the mortgage. Now, most likely, if you do this you will have to remind your mortgage company to remove it, but the reminder phone call is well worth your time.



2. The second way to get rid of PMI is to have an appraisal done on your home when you know that your home has appreciated enough to have your loan balance be 78% of your appreciated home value. In this case, you will still have to wait the full two years, but this way the natural real estate market with increasing home values will help you out. It is up to you however to get the appraisal and send it to your mortgage company. Most appraisals now can be emailed so your appraiser can email you a copy that you can then forward to your mortgage company or PMI company. If you think you fall in this category give your mortgage company a call and they will tell you their procedure.
   
   You may be able to combine these two methods by paying your mortgage down and by having your home value go up. Again, call your mortgage company to find out if this is possible.

I hope this helps you with understanding when and how to you can get rid of PMI on your home mortgage. There aren't too many options other than time and money - guess that is the moral to a lot of housing stories.