If you’re currently paying Private Mortgage Insurance (PMI) and have been for several years, it may be time to petition your lender to have the PMI payment removed.
PMI protects lenders from homeowners that stop making payments on homes with small amounts of equity. It’s an insurance policy that is “cashed in” if the homeowners defaults.
However, federal law allows homeowners to petition the end of PMI if their loan-to-value (LTV) drops below 78%.
An example of 78% LTV is a home that is worth $100,000 on which $78,000 is owed to mortgage lenders.
If you are paying PMI and think you are eligible to have it removed, contact your mortgage lender and ask them about their procedure to remove PMI.
The lender may require that you have your home appraised (at your expense) and that may cost anywhere from $200 to $400 — but if your petition is successful, the cost of an appraisal is still less expensive than the ongoing monthly cost of PMI.