Remove PMI / Cancel Mortgage Insurance
If your home has appreciated or you've paid down your balance, you may qualify to eliminate PMI and save hundreds per month.
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How to Remove PMI from Your Michigan Mortgage
Private mortgage insurance (PMI) is required on conventional loans when the down payment is less than 20%. It protects the lender — not you — in the event of default, and it adds $50 to $200 or more per month to your payment depending on your loan amount and credit score. Removing PMI as soon as you qualify is one of the simplest ways to reduce your housing costs without refinancing.
Automatic Cancellation at 78% LTV
Under the Homeowners Protection Act, your lender is required to automatically cancel PMI when your loan balance reaches 78% of the original purchase price — based on your scheduled payment history, not your home's current value. You do not need to request this cancellation; it happens automatically. However, you must be current on your payments for the automatic cancellation to take effect. If you have made extra principal payments and reached 78% LTV ahead of schedule, you may need to request cancellation rather than waiting for the automatic date.
Requesting Removal at 80% LTV
You can request PMI cancellation once your loan balance reaches 80% of the original purchase price — two percentage points earlier than the automatic cancellation threshold. To request removal, you must have a good payment history (no 30-day late payments in the past 12 months), and the lender may require a new appraisal to confirm the home's value has not declined. If your home has appreciated significantly, a new appraisal could show that you have already crossed the 80% threshold based on current value rather than original purchase price.
Using Appreciation to Remove PMI Faster
In Michigan's appreciating real estate markets, many homeowners have reached 20% equity faster than their amortization schedule would suggest. If your home has increased in value since purchase, a new appraisal may show that your current LTV is already below 80% — even if your original down payment was only 5% or 10%. In this case, you can request PMI removal based on the current appraised value rather than the original purchase price. Your loan officer can advise on whether an appraisal-based PMI removal makes sense for your situation.
Frequently Asked Questions
When does PMI automatically cancel?
PMI automatically cancels when your loan balance reaches 78% of the original purchase price, based on your scheduled payment history. You do not need to request this — it happens automatically as long as you are current on payments.
Can I request PMI removal before 78% LTV?
Yes. You can request PMI removal once your balance reaches 80% of the original purchase price. You must have a good payment history, and the lender may require a new appraisal. If your home has appreciated, you may qualify for removal even sooner based on current value.
How much can I save by removing PMI?
PMI typically costs 0.5% to 1.5% of the loan amount annually. On a $300,000 loan, that is $1,500 to $4,500 per year — or $125 to $375 per month. Removing PMI as soon as you qualify can save you thousands of dollars annually.
Does refinancing remove PMI?
Yes. If you refinance into a new conventional loan with 20% or more equity, the new loan will not require PMI. Refinancing to remove PMI makes the most sense when you can also lower your interest rate at the same time, maximizing the monthly savings.
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