Could your home's value get rid of PMI?
If your Sacramento-area home has gained value since you bought it, you may be able to drop private mortgage insurance years early. The rules are set by whoever owns your loan, so the first step is a call to your loan servicer. This page explains what to ask.
Three ways PMI comes off a loan
It ends on its own. Under the federal Homeowners Protection Act, PMI on most conventional loans terminates automatically when your balance is scheduled to reach 78% of the home's original value, provided your payments are current. No appraisal is involved.
You ask at 80% of the original value. Once your balance reaches 80% of what the home was worth when you bought it, you can request cancellation in writing. The servicer may ask for evidence that the value hasn't dropped.
You ask based on today's value. If the market or your improvements have raised the home's value, your balance may already be a low enough share of current value. This is the route where an appraisal matters, and it is governed by the loan owner's rules, not a single federal standard.
Who orders the appraisal matters
On loans owned by Fannie Mae, the servicer orders the valuation itself, usually a broker price opinion or an appraisal, and charges you for it. An appraisal you order on your own generally will not be accepted in its place. Other loan owners set their own rules, and some servicers may accept an appraisal from a licensed appraiser you choose.
So before paying anyone for an appraisal, call your servicer and ask. If they order it themselves, you don't need one from here, and you should not be sold one.
Questions to ask your servicer:
- Who owns my loan: Fannie Mae, Freddie Mac, or the lender itself?
- Will you accept an appraisal I order from a licensed appraiser, or do you order it?
- If I can order it, do you require a particular report form or an approved appraiser list?
- What loan-to-value do I need, based on current value, and how old must my loan be?
- What payment-history requirements apply?
For reference: Fannie Mae's current-value thresholds.
For a one-unit home you live in or a second home, Fannie Mae's servicing rules generally require the balance to be 75% or less of current value if the loan is two to five years old, or 80% or less if it is more than five years old. Where substantial improvements raised the value, 80% can apply and the two-year wait may be waived. The loan must also be current, with no payment 30 or more days late in the last 12 months and none 60 or more days late in the last 24.
These rules change, and other loan owners use different ones. Your servicer's answer is the one that counts.
If your servicer accepts your own appraisal
Handled personally from start to finish, by the same appraiser you first talk to.
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Get your servicer's requirements
Find out what report form and appraiser qualifications they accept, and send those along with the property address.
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Quote and timeline confirmed
Most PMI removal appraisals of a single-family home or condo run $400 to $500, and you get the exact figure before any work starts.
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Inspection
An interior and exterior inspection, arranged directly with you. If you have made improvements, have a list with dates and costs ready.
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Written appraisal report
The report is typically delivered 3 to 7 business days after the inspection, ready for you to submit with your cancellation request.
Have an FHA loan?
FHA loans carry a mortgage insurance premium (MIP), not PMI, and a new appraisal generally does not remove it. How long MIP lasts depends on when the loan was made and how much was put down. Refinancing into a conventional loan is the usual way out, and that lender orders its own appraisal.
Servicer says you can order your own?
Send the property address and your servicer's requirements for a quote, or call with questions first.
Important information about this service
Valley-Wide Appraisal Services provides independent real estate appraisal services only. Daniel R. Nelson is a licensed residential real estate appraiser, and is not a lender, loan officer, or financial advisor. Nothing on this page is financial or legal advice.
Whether mortgage insurance can be cancelled, and whether an independently ordered appraisal is accepted, is decided by your loan servicer and the owner of your loan. Valley-Wide Appraisal Services does not guarantee any valuation outcome or that mortgage insurance will be removed.
The rules summarized here are general and can change. Confirm what applies to your loan with your servicer before ordering an appraisal.