What Is PMI and Can I Get Rid of It?
Private Mortgage Insurance 101

Mortgage insurance goes by a few different names, including Private Mortgage Insurance (PMI), Mortgage Insurance Premium (MIP), and even Borrower-Paid Mortgage Insurance (BPMI). These all refer to a premium you're required to pay if you have less than 20% equity in your home when you get your loan.

Why is mortgage insurance required?

 

  • Refinance to Remove PMI

    With home values on the rise in many parts of the country, you may have more equity now than your original amortization schedule would suggest. If you think your home has increased in value past the 80% loan-to-value mark, refinancing at this higher valuation will allow you to remove your PMI sooner.

  • Get Lender-Paid Mortgage Insurance (LPMI) Instead

    If you have good credit and higher-than-average FICO® scores, they you may want to consider LPMI instead of paying the monthly premiums yourself. When lenders effectively "bake in" or include the mortgage insurance premiums for you into the interest rate you're offered, it can create significant savings over the life of the loan. This is especially true if you're not very close to 80% loan-to-value yet.

  • Take a Secondary Loan

    Rather than financing the entire loan amount under a single, first mortgage, you may have the option of taking out a Home Equity Line of Credit for the amount over and above 80% loan-to-value. Careful though, HELOC rates are typically higher than first mortgages and may have shorter terms and adjustable rates. 

  • Request PMI Removal

    On conventional loans with PMI, you can typically request that it be dropped at 80% loan-to-value, and it should automatically be removed at 78% loan-to-value. It is important to keep in mind that this is based on the original amortization schedule, not the home's current value. You may be able to request and pay for a new appraisal, but it's no guarantee that your current lender will accept this new valuation and remove your PMI. It may still be necessary to refinance.

Our Mortgage Professionals are always looking for ways to help you avoid paying costly mortgage insurance premiums.

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