Can You Remove Your Mortgage Insurance (PMI/MI)? – Stress Free Mortgage

If you have purchased a home in the past with less than a 20% down payment, or you used an FHA loan, then you would have mortgage insurance (MI) included in your monthly payment.
What is mortgage insurance? It’s an insurance premium you pay on behalf of the lender in case you default on your loan. It’s not for your benefit, it’s for your lenders’ benefit.
If you have an FHA loan, then no matter the amount of the down payment, you will still pay MI. With an FHA loan, unless you have put down more than 10%, the MI never comes off unless you refinance the mortgage. So, if you have a low interest rate on your FHA loan, even if you have more equity in your home, you may not decide to refinance that mortgage to remove the insurance because your end payment would be higher. We look at the entire picture to see what makes sense.
If you have a conventional loan with MI, then you can potentially remove the MI and keep your interest rate. However, there are some caveats there. You must have the loan for a minimum of 2 years and make your payments on time. After 2 years, it’s dependent on the lender that is servicing your mortgage to see their requirements to take of the MI. For many conventional loans, that means that if your current loan to value without any improvements is 80%, then they will not remove the MI. If you have significant improvements such as adding sq. ft to the house, then you would be ok. Otherwise, they will want you to have more equity in the house, such as 75%.It can be complicated as it can vary from servicer to servicer.
We are happy to help you find out your specific situation at Stress Free Mortgage.