Work sheet: 9 steps to cancel PMI
Use this checklist to see how you can stop paying private mortgage
insurance on your home loan.
1. Are you qualified?
Most people can cancel PMI once equity in their home reaches 20 percent. Some types of
loans, such as government insured FHA and VA loans, require PMI for the life of the loan. If
in doubt, call your loan servicer to find out your options.
2. Do you have enough equity?
3. Has your home risen in value?
If home values in your area are rising quickly, your equity will reach 80 percent more
quickly. Mortgage servicers are not required to consider your homes current value but may
4. Have you made extra payments?
The other way to add equity is to make extra payments. Have you made any additional
payments and applied them to principal?
5. Do the math
Estimated value minus mortgage balance = equity.
Equity divided by estimated value = percentage of equity.
If you come up with a figure of 0.20 (20 percent) or greater, and your estimate is accurate,
there's a good chance you can drop PMI and save.
6. Call your lender
Talk to someone at your lender's customer service department to inquire about procedures
for PMI removal. The formal request will likely have to be in writing, but calling first might
save you some false steps later.
7. Write your lender
When you make your written request, ask your lender to provide, in writing, the minimum
amount the property will have to be valued at to qualify to have the PMI dropped.
8. Get an appraisal
Most lenders require a formal appraisal of property -- at your expense -- before they will
approve a request to drop PMI. Ask your lender if it has any specific requirements for the
appraisal or appraiser that must be met. The company, rather than you, might have to order
the work, for example, even though you'll have to pay the tab of approximately $200 to
9. Final precautions
Make sure your loan is up-to-date before making the formal written