If the value of your home increases
due to the neighborhood or home improvements, or if you make enough payments on your mortgage to reduce your balance to 80% of the appraised value, does PMI go away?

Answer: you can cancel your PMI when the lender can be assured that the appraised value of the home has met the 80% threshold.

But note: you must initiate the cancel order — the lender will not do it for you unless:

• you purchase your home after July 29, 1999
• you reach 22% of the original property value
  
  in which case the lender must automatically terminate PMI
  see the FTC site for information

Here are some valuable steps:

(Please note: cancellation of PMI can vary by state and by lender terms. The information supplied below is for informational purposes only on how you might cancel PMI if you meet certain requirements. This information does not substitute information you may receive from legal or financial advisors).

Run the numbers:

Analyze your current loan payment schedule:
download FREE this loan amortization schedule worksheet (Excel spread sheet)

Check home values within an area:
link to our home valuation section


If the current mortgage loan balance (divided by) the estimated value of your home is less than 80%LTV, you may be able to cancel your PMI.

Example:
Appraised home value: $150,000
Amount of Mortgage: $115,000

LTV: 76.66% ($115,000 / $150,000)

In this example, the homeowner can request the lender to cancel their PMI.

Contacting your lender:
Have available your social security number, loan number, and property address.

Explain that you want to cancel your PMI and request that they forward instructions.

Some lenders may have cancellation instructions and forms on their Internet web site.

The lender may require certain items from you:

a) written request for cancellation
b) a formal appraisal or other on your home

view sample letters: http://www.privatemi.com/
Comply with the instructions set out by the lender.