Private Mortgage Insurance (PMI) can be a significant expense for homeowners, but the good news is that you can get rid of it and save money. PMI is designed to protect your lender, not you, and eliminating it can reduce your monthly mortgage payments. Here at O1ne Mortgage, we are committed to helping you navigate the process of canceling your PMI. Call us at 213-732-3074 for any mortgage service needs.

1. Wait for Automatic Cancellation

The federal Homeowners Protection Act of 1998 mandates that your loan servicer must automatically cancel your PMI once you reach 22% equity in your home. This is typically when your principal balance is 78% of the home’s original value. Additionally, PMI must be canceled halfway through your loan term, such as 15 years into a 30-year mortgage, even if you haven’t reached 22% equity. However, you must be current on your mortgage payments to qualify for automatic cancellation.

2. Request Early PMI Cancellation

You don’t have to wait for automatic cancellation. You can request your loan servicer to cancel your PMI once you have 20% equity based on the home’s original value. To qualify, you must have a good payment history and be current on your payments. Additionally, you may need to get an appraisal, and the lender can deny your request if the home’s value has decreased.

3. Make Extra Mortgage Payments

Paying down your mortgage early can help you reach 20% equity faster. You can do this by making extra payments whenever possible. Some homeowners opt for biweekly mortgage payments, which can result in making two extra payments each year, helping you build equity more quickly.

4. Increase Your Home’s Value and Get an Appraisal

If your home’s value has increased due to market conditions or home improvements, you might have more equity than you think. Contact your loan servicer to see if you can cancel your PMI based on the current value of your home. You may need to pay for a home appraisal to confirm the increased value.

5. Refinance Your Mortgage

Refinancing your mortgage is another way to get rid of PMI. If your equity has increased to at least 20%, you can refinance without PMI. Even if you haven’t reached 20% equity, you might avoid PMI with an 80-10-10 loan, also known as a piggyback loan. Some lenders offer PMI-free mortgages with lender-paid private mortgage insurance (LPMI), but these often come with higher interest rates.

Check Your Credit and Be Prepared

Eliminating PMI can lower your monthly costs, and you may still be able to tap into your home’s equity with a home equity loan or line of credit. Your credit history and scores can impact your options, so it’s essential to monitor your credit. Check your Experian credit report for free and monitor your FICO® Score based on your Experian credit report to estimate the interest rate you could get if you refinance or open a home equity loan or line of credit.

Contact O1ne Mortgage for Expert Assistance

At O1ne Mortgage, we are dedicated to helping you save money and achieve your financial goals. If you have any questions about canceling your PMI or need assistance with any mortgage services, don’t hesitate to call us at 213-732-3074. Our team of experts is here to guide you every step of the way.