Removing mortgage insurance

Removing mortgage insurance is something that can happen when the loan-to-value of your home mortgage reaches 80% or less. This happens as a result of two things, paying down principle and your house appreciating.

If you get to the point where you think your mortgage balance is less than 80% of the value of your home, you must call your mortgage company and ask them to remove your mortgage insurance. Most companies will run an AVM or automated valuation model to determine the value of your home. AVMs are generally accurate but not always, so if the value comes in low and you get denied, you still have the option of ordering an appraisal.

With most if not all lenders you still have the right to hire an appraiser and get a professional assessment of value. If your appraiser comes back with the right value, you can submit that to your lender and ask them to remove the MI. They still reserve the right to review the appraisal. If after review your lender agrees with the appraised value, they will remove your mortgage insurance.

In my personal experience, my appraisal came in a few thousand low and as a result I spent $300 for nothing. With hindsight I would have told the appraiser what I needed for value and asked for a comp check. This is where they give you a good estimate of value based on recent sales of comparable homes in your area. If they come back with what you need, you order a full appraisal and send it to your lender. If the comp check comes up short, you don't order a full appraisal saving yourself a few hundred dollars.

Call your loan officer and ask them to do this for you as most mortgage loan officers will probably be using the same appraiser they used for your last appraisal and be able to get you a comp check at no charge.