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I recently bought a home and have paid off 7% of the original loan. Because I bought the house slightly under market value (due to some damage that I've since repaired) and a sharp increase in the local market, I estimate the value of my home has increased to the point that my equity in the house is now >25%.

Will I be able to eliminate PMI payments if I get my home reappraised?

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There are three basic ways to get rid of PMI according to the US government.

Under the Homeowners Protection Act, consumers can cancel PMI in a few different ways:

  • Written request. Once the loan balance has been reduced to 80% of the original value of the homeowner can send a written request to their mortgage servicer to cancel PMI. For example, if the original sales price (or appraisal value at consummation, whichever is lower) and loan amount was $100,000 and regular payments have reduced the outstanding loan balance to $80,000, the homeowner can request to cancel PMI. The lender may consider other factors, such as payment history, when deciding whether or not to cancel PMI. Borrowers should also keep in mind that if the property value has decreased, canceling PMI may not be possible.

  • Automatic termination. For borrowers that are current on their loan, PMI automatically terminates once the principal balance reaches 78 percent of the original value of the home. Using the same example, PMI would terminate for a loan with $100,000 original value once the homeowner reduced the outstanding balance to $78,000.

  • Final termination. If a borrower took out a 30-year fixed rate loan, has made payments for 15 years, and is current on the loan, the loan servicer must terminate PMI. In other words, the servicer terminates PMI coverage right after the borrower has reached the midpoint of the loan’s amortization period.

But if you want to get rid of PMI if the value of the home has increased due to property values going up, or you making renovations or additions, you will need the lender to review the valuation.

You should make sure that the appraiser they use visits the property and doesn't do it based on the governments tax records and then compares it to similar properties. It can take time for the government tax documents to reflect any additions you have made to the property. If you convert the house to have an extra bedroom, the tax records might not reflect that, and therefore the comparable properties will be wrong.

You will have to pay for the appraisal, but don't do that until the lender tells you about their process.

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You would need to check with the bank, it may be that they would only trust an appraiser they sent themselves. But yes, in general as long as your LTV is below 80% you should be able to get rid of the PMI.

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  • It also depends on the loan. My first mortgage had PMI and it was for the life of the loan. The only way I could get rid of PMI was to refinance. Something similar is happening with my construction loan for a new house, the original estimate had me well below 20% LTV but we are doing a re-appraisal and new loan to get rid of PMI.
    – Ron Beyer
    Feb 6 at 4:31

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