How Do I Get Rid of Private Mortgage Insurance (PMI)?

If you pay for private mortgage insurance (PMI) you’re not alone. The average down payment on a home purchase is only 6% requiring most homeowners to pay for PMI each month.

If you had less than a 20 percent down payment when you bought your house, your lender probably required you to have private mortgage insurance. Private mortgage insurance (PMI) protects your lender if you can’t make your mortgage payments.

PMI isn’t cheap either. While avoiding PMI in the first place saves you the most money, it’s not always possible. But if you already have it, there are ways you can get rid of PMI and save money each month.

Why You’d Want to Remove PMI*

• It’s expensive. PMI costs between 0.25 to 2.0 percent of the mortgage loan — on top of the principal and interest payment. For example, if you have a mortgage loan of $180,000, at a PMI rate of 1%, you’ll pay $150 each month, adding up to $1800 each year.
• You’re paying for insurance that protects your lender, not you. Your lender is the sole beneficiary of the private mortgage insurance.
• Monthly PMI premiums are not tax-deductible.

When Can You Get Rid of PMI?