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3 Min Read • 06/20/2025
Private Mortgage Insurance (PMI) can add hundreds of dollars to your mortgage payment each month, but the good news is, it's not forever. Whether you’re planning ahead or looking to drop it ASAP, there are several strategies that can help you eliminate PMI and save money.
This post breaks down five effective ways to remove PMI, along with the pros and cons of each approach so you can make the right move for your financial situation.
By law, your lender must automatically cancel PMI when your loan-to-value (LTV) ratio hits 78%, assuming you're current on your payments. This is based on your original purchase price or appraised value at the time of purchase, whichever was lower.
Pros:
No action needed on your part
Federally guaranteed under the Homeowners Protection Act
Cons:
May take years to reach this threshold
Relies solely on your original amortization schedule, not current market value
You don’t have to wait for automatic cancellation. Once your loan balance hits 80% of your home’s original value, you can proactively request PMI cancellation from your lender.
Pros:
Happens sooner than automatic removal
Straightforward if you've made regular payments
Cons:
Still based on original home value, not current market appreciation
You may need to submit a written request and meet specific conditions (e.g., no late payments)
If your home has appreciated in value, you might reach 80% LTV sooner based on the current market value rather than the original purchase price. You’ll need to pay for an appraisal and formally request PMI removal.
Pros:
Leverages market appreciation
Faster path to cancellation if your home’s value has increased significantly
Cons:
Appraisal cost (typically $300-$500)
Lender approval is required and not guaranteed
Refinancing can eliminate PMI if your new loan balance is 80% or less of your home's current appraised value. This strategy is especially smart if you can also lock in a lower interest rate.
Pros:
Potentially eliminates PMI and lowers your rate
Resets loan terms to better fit your financial goals
Cons:
Closing costs apply
Credit score and income must qualify
You restart your amortization schedule
If you can afford to make extra payments toward your principal, you’ll reach the 80% LTV threshold faster. This can be done through lump sums or increased monthly payments.
Pros:
No need to refinance or request new appraisals
Reduces interest over the life of your loan
Cons:
Ties up cash that could be used elsewhere
PMI isn’t automatically removed, you still need to submit a cancellation request
PMI isn’t permanent, and understanding how to get rid of it can put hundreds back in your pocket each month. Whether you’re counting on automatic removal, making extra payments, or taking advantage of rising home values, one of these five methods could be right for you.
Before acting, check your mortgage terms, contact your lender, and consider the upfront costs vs. long-term savings. Eliminating PMI is a smart financial move, but it takes the right strategy to make it happen.
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