What is PMI Removal?

PMI removal refers to the process of eliminating Private Mortgage Insurance (PMI) from a mortgage loan. PMI is typically required by lenders when a borrower makes a down payment of less than 20% of the home’s purchase price. This insurance protects the lender in case the borrower defaults on the loan.

However, once the homeowner builds sufficient equity in the property, usually 20% or more, they may be eligible to remove PMI, potentially resulting in significant savings on monthly mortgage payments.

How to Use the PMI Removal Calculator/

1. Gather Your Mortgage Information

Before using the calculator, collect the following information:

• Original loan amount
• Current home value
• Current loan balance
• Interest rate
• Monthly mortgage payment

2. Enter the Original Loan Amount

Input the initial amount you borrowed when you first took out your mortgage. This figure can be found on your original loan documents.

3. Input the Current Home Value

Enter your home’s current market value. You can use recent appraisals, comparable sales in your area, or online estimation tools to determine this figure. Keep in mind that a more accurate value may be required by your lender for actual PMI removal.

4. Provide the Current Loan Balance

Enter the remaining balance on your mortgage. This information can be found on your most recent mortgage statement or by contacting your lender.

5. Enter the Interest Rate

Input your current mortgage interest rate as a percentage. For example, if your rate is 3.5%, enter 3.5.

6. Input Your Monthly Payment

Enter your total monthly mortgage payment, including principal and interest. Do not include property taxes or insurance if they are escrowed separately.

7. Click “Calculate PMI Removal”

After entering all required information, click the calculate button to process your data.

The calculator will display your current Loan-to-Value (LTV) ratio and provide one of two outcomes:

a) If your LTV is 80% or less, you’ll see a message indicating that you may be eligible to remove PMI now.

b) If your LTV is above 80%, the calculator will estimate how long it will take to reach 80% LTV based on your current payment schedule.

8. Consider Additional Factors

Remember that this calculator provides an estimate based on the information you’ve entered. Factors such as home value appreciation, extra payments, or changes in your loan terms can affect the PMI removal timeline.

9. Contact Your Lender

If the calculator indicates you’re close to or have reached 80% LTV, consider contacting your lender to discuss the official PMI removal process. They may require a formal appraisal or have specific criteria for removal.

By using this PMI Removal Calculator, you can gain valuable insights into your mortgage equity position and potential PMI removal timeline. This information can help you make informed decisions about your mortgage and potentially save money by eliminating PMI payments when eligible.