If you bought a home in the last few years with less than 20 percent down, you've probably been paying private mortgage insurance every month.
That extra line item usually runs between 0.3 percent and 1.5 percent of your loan amount per year, which on a $350,000 mortgage can mean $100 to $400 tacked onto your payment for years.
Here's the part a lot of homeowners miss: PMI is not permanent.
Once you've built enough equity, you can ask your lender to cancel it.
And recent updates to the rules that govern when servicers must drop coverage have made that process a little more predictable.
The baseline rules come from the Homeowners Protection Act.
Your servicer generally has to cancel PMI automatically once you reach 22 percent equity based on the original value of the home and your original payment schedule.
You can also request cancellation yourself at 20 percent equity.
The newer piece is the valuation question.
Fannie Mae and Freddie Mac updated their servicing guidelines to clarify that borrowers can use a new appraisal to show current market value, not just the original purchase price.
In a market where home values climbed fast, that matters.
A house bought for $300,000 that now appraises at $400,000 can hit the 20 percent equity threshold years earlier than the amortization schedule suggests.
To request removal, you'll typically need to be current on payments, have a good payment history, and submit a written request.
Your lender may require an appraisal, which you often pay for out of pocket, usually a few hundred dollars.
Some servicers accept a broker price opinion or an automated valuation instead, which costs less.
The math on whether it's worth it is simple.
If you're paying $150 a month for PMI and an appraisal costs $500, you break even in under four months.
After that, it's money back in your pocket every single month.
If you put down less than 10 percent on an FHA mortgage, that mortgage insurance premium typically lasts for the life of the loan unless you refinance into a conventional product.
VA loans don't carry monthly PMI at all, though there's a one-time funding fee.
USDA loans have their own annual fee structure.
A few practical steps if you want to explore this.
Pull your current mortgage statement and find the PMI line.
Then check your loan balance against a realistic estimate of your home's value.
If you're anywhere near 20 percent, call your servicer and ask what their specific process requires, because it varies by lender and investor.
Also watch for a common trap: some homeowners assume they need to wait for the automatic 22 percent cancellation.
Requesting at 20 percent puts you in control and can save you a year or more of premiums.
If your loan was sold or transferred, as many are, make the request in writing and keep a copy.
Verbal requests have a way of disappearing in a servicing shuffle. **The bottom line:** PMI removal isn't automatic magic, but it's one of the few household expenses you can legitimately eliminate with a phone call, a form, and sometimes a few hundred dollars for an appraisal.
Final Thoughts
If you've been paying it for years without checking your equity, you may be leaving real money on the table every month.