As your trusted mortgage broker team here in sunny Phoenix, Arizona, we want to shed some light on a common query: When can you bid farewell to Mortgage Insurance Premium (MIP) or Private Mortgage Insurance (PMI)?

Mortgage Insurance Premium vs Private Mortgage Insurance

Both types of mortgage insurance protects the lender, not you, if you stop making payments on your mortgage loan. The FHA mortgage insurance premium is included on all FHA loans and cannot be removed unless the loan is paid in full or refinanced into a different loan type. Private mortgage insurance (PMI) is required on a conventional loan when you put have a down payment of less than 20 percent of the purchase price and can be removed….

Is it 78% or 80%?

Generally, you can request PMI removal from your loan servicer once your principal mortgage balance hits 80% of the home’s original value. Now, let's talk criteria. Your servicer is obliged to grant your PMI cancellation request if you've got your ducks in a row:

• You've made your request in writing.

• Your payment history is clean and you're up to date with payments.

• There are no junior liens (like a second mortgage) on your home.

• You can provide evidence (like an appraisal) that your home's value hasn't dipped below the original value—if it has, PMI cancellation might be delayed.

Once your home value has hit 78%, your servicer must automatically wave goodbye to PMI.

If you've got more questions or need assistance navigating the PMI maze, don't hesitate to reach out to Gervais Mortgage. As your trusted mortgage advisors, we’re always here to help.