Paying for Private Mortgage Insurance (PMI) is frustrating—especially when it puts an extra burden on your monthly budget. At Y&L Mortgage, we believe those extra dollars could go toward the things that matter to you, not insurance for your lender. Here’s how to eliminate PMI earlier and regain financial freedom.
What Is PMI and Why Do You Pay It?
PMI (Private Mortgage Insurance) is required when you put less than 20% down on a conventional mortgage. It protects the lender, not you. Typically, PMI costs range from 0.14%–2.24% of your loan amount per year, added to your monthly payment
Automatic PMI Cancellation: Know Your Rights
Under the Homeowners Protection Act of 1998, your lender must automatically cancel PMI when your loan balance reaches 78% of the original value, assuming you're current on payments.
But this means you’ll keep paying PMI even as your balance hovers between 78–80%. We believe you deserve better—and faster.
Request Early Removal at 80% Equity
Thanks to federal law, you can ask for PMI cancellation once your balance drops to 80% of the home's original price. Your lender can’t deny a request at this point if:
- You’ve made on-time payments,
- No other liens are on your home,
- The lender confirms current market value (usually via appraisal)
Making extra principal payments or benefiting from home value appreciation puts equity in your corner—use it!
How to Prepare Your PMI Cancellation Request
-
Monitor Your Equity
- Check your mortgage statements regularly to review the outstanding balance.
- Use recent local sales or Zillow estimates to estimate your home’s current value.
-
Make Your Request in Writing
- Once you estimate reaching 80% equity, submit a written request to your lender with your loan info and account balance.
-
Be Ready for an Appraisal
- Lenders may require a new certified appraisal—they usually arrange and bill you for it. If value confirms LTV ≤80%, PMI must be removed.
-
Stay Current on Payments
- PMI only ends if you remain current on your mortgage—no missed payments.
Alternative Paths to Eliminating PMI
- Refinancing: When your LTV drops to 80%, refinance into a conventional loan—zeroing out PMI if market conditions and rates make sense.
- Re-amortizing (Recasting): Make a one-time large principal payment and recast your mortgage, potentially dropping LTV enough to eliminate PMI.
- Piggyback Loan: At purchase, combine a second mortgage (e.g., 80/10/10) to avoid PMI—though this is less common in today’s market.
Real-Life Example from New Jersey
“A buyer in Morris County made extra payments and hit 80% LTV a year early. We helped her file with her servicer, and after a quick appraisal, her lender removed PMI. She saves over $150 monthly now.”
Stories like this happen all the time—and you could be next!
| Step |
Action |
| 1 |
Track loan balance vs. original price |
| 2 |
Estimate current home value |
| 3 |
Confirm 80% equity reached |
| 4 |
Submit written PMI removal request |
| 5 |
Complete any required appraisal |
| 6 |
Pay off any secondary liens |
| 7 |
Stay current on your mortgage |
| 8 |
Consider refinance or recast options |
Let Y&L Mortgage Guide You
Our New Jersey-friendly loan officers know the ins and outs of PMI and equity-based savings strategies. We'll help you:
- Track equity and project timelines
- Coordinate appraisal and paperwork
- Explore refinance or recast options
- Keep you on track to pay less in monthly mortgage costs
Ready to stop paying unnecessary PMI? Contact Y&L Mortgage today—let’s start reclaiming your money and moving toward true homeownership.
FAQs
PMI is automatically cancelled when your loan balance reaches 78% of the original home value—but only if your payments are current and no junior liens exist
Yes—you must submit a written request to your lender once your balance hits 80%, if you’re current on payments and don’t have other liens
Provide a recent home appraisal arranged by your lender. Alternatively, some lenders accept Comparative Market Analyses (CMAs) or automated valuations
Refinancing into a conventional loan with ≤80% LTV will remove PMI. But refinance only if it saves you money, considering closing costs and current rates
PMI was tax-deductible under federal law until 2018; currently it’s not. Always check with your tax advisor for the latest rules.
FHA borrowers pay Mortgage Insurance Premiums (MIP). FHA MIP typically lasts the life of the loan unless you put down 10%+. The only way to remove it is via refinancing to a conventional loan
Yes—if your home’s value rises enough to push your LTV ≤80%, your lender can remove PMI after appraisal and review
