If you bought a home in the last few years with less than 20 percent down, there's a decent chance you're paying hundreds of dollars a month for insurance that protects your lender, not you.
Private mortgage insurance, or PMI, typically runs between 0.3 percent and 1.5 percent of your loan amount annually.
On a $350,000 mortgage, that's roughly $1,750 a year — money that buys you absolutely nothing.
The frustrating part is that PMI doesn't last forever, but the rules for getting rid of it are buried in paperwork most people never read.
Under the Homeowners Protection Act, your lender must automatically cancel PMI once your loan balance drops to 78 percent of the home's original value, based on your original amortization schedule.
You can also request removal earlier — at 80 percent — but you have to ask.
That gap between 80 and 78 percent matters more than it sounds.
On a typical 30-year loan, hitting 80 percent can take months or even years before the automatic cancellation kicks in.
If you never make the call, you're simply donating that money to your servicer.
The 80/78 percent thresholds are based on your original home value and original payment schedule, not what your house is worth today.
If you put down 10 percent and your market has since boomed, you might have well over 20 percent equity on paper — but your lender isn't required to care.
To use current market value, you generally need a new appraisal, and that usually means refinancing or formally requesting cancellation with documented proof.
You can request PMI removal once you hit 80 percent loan-to-value, but you need a good payment history, and your lender may require an appraisal.
Some servicers will accept a broker price opinion or a automated valuation instead, which costs far less than a full appraisal.
Ask which option yours accepts before you pay for anything.
There are other escape hatches worth knowing.
If you've made significant improvements to the home, or if your area has seen strong appreciation, a fresh valuation can push you over the threshold faster.
FHA loans work differently — mortgage insurance premiums on FHA loans often last the life of the loan if you put down less than 10 percent, which is why some borrowers refinance into conventional loans once they have enough equity.
Servicers are required to send you an annual notice about PMI, and a reminder when you're approaching cancellation.
In practice, these letters get tossed with the junk mail.
Set your own calendar reminder based on your loan amortization schedule, and check your statement to confirm exactly what you're paying each month.
If you think you're close to the threshold, call your servicer and ask two questions: what's my current loan-to-value based on the original value, and what documentation do you need to cancel PMI?
The bottom line: nobody is going to cancel this for you ahead of schedule.
Final Thoughts
A 15-minute phone call could put $100 or more back in your pocket every month — and in a housing market where every dollar counts, that's one of the easiest wins available to homeowners who bother to pick up the phone.