Empower Yourself with Knowledge:

First, look at your mortgage documents or contact your lender to understand the requirements for PMI removal. Remember, each lender may have criteria for when PMI can be removed, so understanding this gives you the power to navigate your financial situation.

Determine Loan-to-Value Ratio (LTV):

Lenders often require that you have a certain amount of equity in your home before they will consider removing PMI. This is usually expressed as a percentage of your home’s value. To calculate your LTV ratio, divide the amount you owe on your mortgage by the current value of your home. The recent appreciation of home values has given many a much-improved loan to value. Many sites are available that can help you determine your current value. We can help you with this process.

Request PMI Removal:

If your LTV ratio is based on the original purchase price and the amortized loan balance is below the LTV threshold your lender requires to remove PMI, you can still formally request its removal. Contact your lender to initiate this process. They may require documentation, such as an appraisal of your home, to verify its current value.

Make Necessary Payments:

Some lenders may require you to make additional mortgage payments to reach the necessary LTV ratio before PMI can be removed. Ensure that you have been current on your mortgage payments.

Automatic Termination:

In some cases, lenders are legally required to automatically terminate PMI once your loan balance reaches a certain percentage of the home’s original value. This is typically when the loan-to-value ratio reaches 78%, but it can vary depending on the terms of your mortgage and local laws.

Refinance:

If you can’t meet the requirements for PMI removal through the above steps, another option is to refinance your mortgage. If the value of your home has increased significantly since you purchased it, you may be able to refinance with a new loan without PMI. Depending on current interest rates, this option may not provide much improvement. Refinancing may also give you the option to borrow additional cash to pay off other debt or for other needs you have been putting off.

Monitor Your Equity:

Keep track of your home’s value and your remaining mortgage balance over time. As you pay down your mortgage and/or your home’s value increases, your LTV ratio will decrease, making it easier to remove PMI in the future. We can help you calculate and monitor your current loan-to-value. Call American Property Financial, 210-614-8951