My wife and I purchased a single-family home 6 months ago. We put about 13% down for $1,321,000. We’re currently paying PMI. On the initial purchase, the appraisal came in at $1,400,000. We’ve done renovations, which, along with the initial appraisal, we hope will allow us to refinance out of our PMI. What would be the best way to go about a refinance so we can eliminate PMI if we want to shop around lenders?
Check with your current lender first. Some lenders allow PMI removal after an appraisal demonstrates you’ve reached 80% loan-to-value (LTV). It cost me $300 for an appraisal and saved me $100/month.
If your renovations can’t be documented, you might need to wait until you’ve owned the home for at least a year. Contact your lender to clarify the requirements before spending money on an appraisal.
To shop around for a refinance, contact multiple lenders and request loan estimates. Once you choose a lender, they’ll order an appraisal to determine your home’s current value, which will confirm your LTV and whether you can remove PMI.
Since your loan appears to be non-conforming, there may be specific requirements for early PMI removal. Call your loan servicer to inquire about their policies and what steps are needed.
Keep in mind some lenders require PMI to be in place for at least 12 months. Reach out to your lender to confirm their policy, as you’ll likely need to pay for an appraisal to prove the updated value.
Refinancing isn’t always necessary to remove PMI. Your lender should automatically remove it when you hit 78% LTV. To request early removal (usually allowed after 1 year), contact your lender, who will likely require an appraisal.
@Vero
To remove PMI early, contact your lender’s escrow department and request an evaluation, provided you’ve had PMI for over a year. Otherwise, it falls off automatically at 78% LTV.