Millions of American homeowners are paying for private mortgage insurance they no longer need, and many don't realize they can do something about it.
PMI typically costs 0.5% to 1.5% of your loan balance annually, which on a $350,000 mortgage can run $1,750 to $5,250 a year.
That's real money at a time when grocery bills and insurance premiums are already stretching household budgets.
The good news is that the rules for getting rid of PMI are clearer than most people assume, and rising home values have pushed a lot of borrowers past the thresholds required to cancel it.
Two paths exist, and they work differently.
The first is a borrower-requested cancellation, which you can ask for once your loan balance drops to 80% of your home's original value.
If you've made steady payments, that usually happens on its own through amortization, though it can take years.
The second is automatic termination, which kicks in by law when your balance hits 78% of the original value based on your normal payment schedule.
Here's where things get interesting for anyone who bought in 2020 or 2021.
The Homeowners Protection Act lets you use either the original sales price or the current appraised value to calculate that 80% threshold, as long as you've made improvements or the market has moved in your favor.
In markets where values jumped 30% or more, plenty of borrowers are sitting well past 80% loan-to-value without knowing it.
A new appraisal costs a few hundred dollars, but it can wipe out thousands in annual premiums.
The catch is that servicers rarely volunteer this information.
You generally have to request the cancellation in writing, and some lenders require a formal appraisal or a broker price opinion before they'll sign off.
Federal rules also require a good payment history, meaning no 30-day late payments in the past 12 months and no liens on the property.
If your request gets denied, there's an appeal path, and if you believe the servicer violated the law, you can file a complaint with the Consumer Financial Protection Bureau.
That route has teeth, and lenders know it.
If you put down less than 10%, that mortgage insurance premium typically lasts the life of the loan unless you refinance into a conventional product.
That's one reason refinancing has stayed popular even with rates higher than the pandemic-era lows.
For homeowners sitting on a low rate they don't want to give up, cancellation is the better move.
It keeps the loan intact and simply removes the insurance line item from your monthly statement. **Our take:** PMI cancellation is one of the few household money moves that costs almost nothing to pursue and can pay off immediately.
If you've been in your home for a few years and values in your area have climbed, pull your loan statement this week and check where your balance sits relative to your original value.
Final Thoughts
A phone call and a written request could be the easiest raise you get all year.