If you bought a home in the last few years with less than 20 percent down, there's a decent chance you're paying private mortgage insurance every single month.
It's not a tax, it's not an escrow mistake, and it's not permanent.
PMI is a fee your lender tacks on to protect itself in case you default, and for a lot of homeowners it quietly adds $100 to $250 to the payment.
Here's the good news: there is a clearly defined exit door, and most people never bother to walk through it.
Federal law under the Homeowners Protection Act spells out exactly when your lender has to drop the fee — and when you can ask for it sooner.
The automatic removal date is based on your original loan terms and payment schedule.
On a typical 30-year fixed loan with 20 percent down, PMI generally has to end once you've paid the balance down to 78 percent of the home's original value, as long as you're current on payments.
That's 22 percent equity, measured against the original sale price, not today's market value.
But you don't have to wait for the lender to act.
Once you hit 20 percent equity, you can request cancellation in writing.
The catch is that lenders can require you to be current on payments, have a clean payment history, and in many cases prove the home's value with an appraisal — which you pay for out of pocket.
Some servicers also require the request to come with documentation and a specific form.
The fastest legitimate shortcut is a new appraisal in a rising market.
If you put 10 percent down two years ago and your area has jumped, a fresh appraisal might show you've crossed the 20 percent line already.
That appraisal might run $500 to $800, but if it kills a $150 monthly PMI charge, it pays for itself in well under a year.
FHA loans work differently — if you put down less than 10 percent, that mortgage insurance premium usually lasts the life of the loan unless you refinance into a conventional loan.
Also, missing payments can reset your clock, and some lenders drag their feet on processing requests, so follow up in writing and keep a copy of everything.
If you're not sure where you stand, pull your latest mortgage statement, find the PMI line item, and call your servicer.
Ask two questions: what is my current loan-to-value ratio, and what exactly do I need to submit to cancel PMI?
Write down the answers and the name of the person who gave them.
The bottom line: PMI is one of the few household expenses you can legally delete with a phone call, a form, and sometimes an appraisal.
It's worth an afternoon of paperwork to keep a couple hundred dollars a month in your own pocket.
Final Thoughts
If your lender won't give you a straight answer, ask for the request in writing — that tends to speed things up considerably.