PMI or "Private Mortgage Insurance" is insurance that lenders require from homebuyers who obtain loans that are more than 80 percent of their home's value. In other words, buyers with less than a 20 percent down payment are normally required to pay PMI. This insurance is paid monthly as part of the homeowners monthly mortgage payment. This insurance allows home buyers to purchase a home with as little down as 3 or 5 percent of the purchase price, while protecting the mortgage holder in case of default.

One thing that many homeowners do not realize is that once the value of the home or the balance of the mortgage reach a point that the homeowners equity exceeds 20 percent, the PMI can be removed or canceled. If you find yourself in this position, call your mortgage holder. Find out their procedures to remove the PMI, and reduce your monthly payment. Sometimes the mortgage company will require an appraisal as proof, but the fee for the appraisal has the potential to save you a lot of unnecessary payments of PMI.