Generally speaking, PMI drops off of your monthly payment once you have paid down your mortgage loan to 80% of the home value. In some cases, you will need to request in writing that the PMI be removed at that point.
It should also be noted that PMI has been made tax deductible for many American households for new mortgages in 2007. The tax deductibility of mortgage insurance allows borrowers who qualify to more easily compare single mortgages with so called "combo loans" or "80/20" financing.
PMI is a type of insurance that protects the lender against mortgage loan defaults by customers. That insurance does not protect you as a homeowner in any way. PMI is not going to help you save your home if your home is foreclosed upon and PMI is not going to protect your home or it's contents if your home burns down or any other disaster happens. PMI will simply help you buy a home or refinance your home with little to no equity in the home. It protects the lender and gives them more protection on their mortgage loan to you.
Another option to private mortgage insurance is called Lender Paid Mortgage Insurance (LPMI). This means that the lender will give you a slightly higher interest rate and pay the PMI premium for you.
Borrowers whose household income exceeds the limit for tax deductibilty of PMI can still qualify for Lender Paid MI.
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