Your roadmap to dropping private mortgage insurance
The refinance detour
Your next move
Refinancing can drop PMI if the new loan's balance is low enough relative to the new appraised value. It makes sense when the PMI saved plus any other improvement outweighs the closing costs over the time you will keep the loan. If the only goal is removing PMI, check the cancellation and appraisal routes first because they cost less.
Last reviewed against the primary sources listed below.
Break-even check
- Monthly PMI you would drop.
- Any change in principal and interest.
- Total closing costs.
- Months to recover the costs.
Rate-and-term rules
A refinance without cash out is a limited cash-out refinance under Fannie Mae's rules.
PMI questions on the road
Should I refinance to get rid of PMI?
Only if the savings outweigh the closing costs over the time you keep the loan. Try cancellation or a value-based removal first.
How much down payment avoids PMI?
On conventional loans, PMI is usually required when the loan is more than 80 percent of the value. Ask a lender for options.