Can I Cancel PMI If My Home Value Increases? How to Get Rid of It

So let’s recap: What just happened?

The above example gets to the heart of the question: Can I cancel PMI if my home value increases? The answer is: Maybe.

“In an upswing like this, I would say you have a better chance of getting rid of your private mortgage insurance, but it’s not a guarantee, because it depends on each lender’s process and making that happen,” says Vickie Clark Jennings, a top real estate agent in Fredericksburg, Maryland, who has four decades of experience.

Rising home values can build equity and increase your stake in the property, making you a potentially lower-risk borrower. Sometimes, to cancel PMI, all you have to do is make mortgage payments on time and watch your home value grow, then connect with your servicer on the next steps.

The same concept applies if you’ve made any major home improvements, such as a bedroom, kitchen, or bathroom remodel, to increase the appraised value of the home. When the appraised value of your home goes up since the time of purchase, it means your equity has grown, and it may allow you to lose the training wheels of your mortgage, your PMI.

So, having a solid idea of your home’s value and how it’s changed can help you track when it might be time to ditch the PMI. However, a simple hunch won’t be enough to get your lender to remove it. You’ll need to get an appraisal or another official valuation of your home (more on that below).

4. You eliminate PMI when refinancing your home.

When you apply for a refinance, your lender will typically require an appraisal. If, based on the home’s appraised value, you have at least 20% equity, “then the second that that loan closes, the new loan starts without private mortgage insurance,” shares Richie Helali, a mortgage expert with HomeLight.

Keep in mind that you’ll have to pay closing costs on the refinance and the fees for the appraisal.

5. You’re midway through your loan’s term.

If you’re up to date and current on your PMI payments, then the lender must terminate PMI the month after you reach the midpoint of your loan’s amortization schedule.

If you’re midway through your loan’s term, this PMI termination applies even if you have not reached 78% of the original value of your home. For example, on a 30-year loan, PMI would be removed after 15 years.