Definition
The process of removing Private Mortgage Insurance from your home loan once you’ve built sufficient equity, reducing your monthly payment.
What to consider
- Monitor your home equity to know when cancellation might be an option.
- Request a review from your lender once you hit the threshold.
- Keep documentation handy to support your cancellation request.
Real world scenarios
- By consistently paying more toward principal, Julie reaches 20% equity in her home and requests the removal of PMI, immediately lowering her mortgage bill.
- Cedric orders a new appraisal to prove his home’s increased value. This appraisal helps him cancel PMI ahead of schedule.
- After dropping PMI, Madison redirects the freed-up monthly amount toward accelerating other debts.
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