How do I cancel PMI?

Under Federal law, Private Mortgage Insurance, or PMI, is automatically canceled when your loan balance is 78% of the home's value. Technically, you don't have to do anything, but we suggest you follow-up with your lender and make sure the PMI has in fact been canceled.

PMI is a mortgage fee charged by lenders when there's less than 20% equity in a home. The fee allows people to purchase a home without making a 20% down payment.

What many people don't know is that they can request cancellation of PMI once the loan is at 80% of the home's value.

If you want to request cancellation of PMI, you'll need an appraisal of the home. Most lenders require a state-certified appraisal and may require that it be on a specific form as well. Call your lender and ask about their requirements regarding PMI cancellations. If possible, get it in writing. Tell your lender you want to request that your PMI be cancelled; they can help you through the process.

When considering whether or not to cancel PMI, your lender will consider other factors as well, including payment history. It's in your best interest to find out as soon as possible what factors affect your lender's decision to cancel PMI. The sooner you know, the sooner you'll be able to take pro-active steps towards eliminating this expense.