Private mortgage insurance or “PMI” policies are designed to reimburse a mortgage lender up to a certain amount if you default on your loan and your house isn’t worth enough to entirely repay the lender through a foreclosure sale. Most lenders require PMI on loans where the borrower makes a down payment of less than 20%.

Premiums are usually paid monthly or you can pay them off completely with a single premium. You can normally cancel the PMI once your equity in the house reaches 20% equity, so long as you’ve made timely mortgage payments. You would need to contact your lender to request this. They may require you to have an appraisal done to show the 20% equity.

Posted in: Mortgage FAQs