Eliminating PMI
How to Eliminate PMI on Your Conventional Loan (Sooner Than You Think!)
Today I want to help you tackle a common frustration for many homeowners: private mortgage insurance, or PMI.
If you’re paying PMI on your current conventional loan, you might feel stuck — but the good news is there are ways to eliminate it, and some options might be easier and faster than you think. Let’s dive in!
What is PMI?
PMI is a type of insurance that protects your lender if you stop making payments on your loan. It’s typically required when your down payment is less than 20% of the home’s purchase price. While it can help you get into a home sooner, most homeowners are eager to remove it as soon as possible.
1️⃣ Pay Down Your Loan Early
One of the quickest ways to eliminate PMI is to pay down your mortgage to reach 80% of your home’s original purchase price ahead of schedule. If you come into extra cash — from a bonus, tax refund, or savings — consider making an extra lump sum payment directly toward your principal balance. Once your loan-to-value (LTV) ratio hits 80%, you can request that your lender remove PMI immediately.
2️⃣ Request a New Appraisal
Has your home’s value increased since you bought it? You might be able to remove PMI without paying extra toward your principal. If you’ve built at least 20% equity thanks to rising home values, you can request a new appraisal.
Just note: Most lenders require you to wait at least 10 to 12 months before you can ask for an appraisal-based PMI removal. But if your home has appreciated significantly, this can be an excellent strategy.
3️⃣ Stay the Course
Even if you stick to your regular payment schedule, you’ll eventually reach that 80% mark. When you do, don’t forget to call your lender and request PMI removal — it won’t happen automatically at 80%.
By law, lenders are required to remove PMI once your loan balance drops to 78% of the original value (or 22% equity), but you don’t have to wait that long. Being proactive could save you months (or even years) of unnecessary payments.
Thinking About Buying Before Selling?
If you're considering buying a new home before selling your current one, remember: PMI is temporary and not as costly as many think. On a conventional loan, it will eventually drop off, so don’t let it hold you back from your next move.
If you have questions about PMI or want to explore strategies tailored to your situation, I’d love to help. Reach out anytime!
– Raegan Thorp, Raegan Thorp Real Estate Group
Raegan Thorp
Raegan Thorp Real Estate Group
📞 (404) 734-1174
📧 info@rtrg.homes
🌐 www.RaeganThorp.com
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