How to Cancel PMI Without Refinancing by Leveraging Your Home's Increased Value
- diverseworldllc
- Jun 7
- 3 min read
If you bought a home between 2020 and 2022 and you are still paying private mortgage insurance (PMI), you might be paying more than you need to. Many homeowners do not realize that refinancing is not the only way to get rid of PMI. Your home’s value has likely increased since you bought it, and that appreciation can help you cancel PMI without refinancing. The catch is that your mortgage servicer won’t bring this up on their own. You need to take the first step.
Understanding PMI and When It Ends Automatically
Federal law requires mortgage servicers to cancel PMI automatically when your loan balance reaches 78% of your original purchase price. This means the servicer looks only at the original price you paid for your home, not its current market value. If your neighborhood has seen a surge in home prices, that increase is invisible to your servicer unless you tell them.
For example, if you bought your home for $300,000, your servicer will automatically cancel PMI once your loan balance drops to $234,000 (78% of $300,000). But if your home is now worth $350,000, you might have more equity than your loan balance suggests. This equity can help you cancel PMI earlier if you ask for a new appraisal.
Check Your Home’s Current Value Before Calling
Before contacting your mortgage servicer, check your home’s estimated value on websites like Zillow, Homes.com, or Realtor.com. These estimates are not official appraisals but give you a quick idea of whether your home’s value has increased enough to justify asking for PMI cancellation.
If these estimates show your home is worth significantly more than your original purchase price, it’s worth starting the conversation with your servicer. For example, if your home was $300,000 at purchase and now estimates show $360,000, you likely have enough equity to cancel PMI.
Include Home Improvements in Your Appraisal Request
If you have made improvements to your home since buying it, such as a new roof, kitchen update, or bathroom renovation, these upgrades can increase your home’s appraised value. This can shorten the timeline for PMI cancellation.
Before the appraiser arrives, gather receipts, contractor invoices, and before-and-after photos of your improvements. Present this information to the appraiser at the start of the visit. While it doesn’t guarantee a higher appraisal, it helps provide a complete picture of your home’s value.
How to Approach Your Mortgage Servicer
Call the company that collects your mortgage payments and ask about their PMI cancellation process. Different servicers have different policies:
Some will perform their own valuation at no cost to you.
Others will require a certified appraisal, which usually costs between $400 and $600.
Some accept a Broker Price Opinion (BPO) as a lower-cost alternative, typically around $150 to $200.
Important: Do not order an appraisal before talking to your servicer. Many require that the appraisal order comes through them to qualify for PMI cancellation.
What to Expect After Requesting PMI Cancellation
Once you request PMI cancellation, your servicer will review your loan balance and home value. If the appraisal confirms you have at least 20% equity based on the original purchase price, they will cancel PMI.
Keep in mind:
The appraisal must be a certified appraisal or an approved alternative.
The servicer may have specific forms or procedures to follow.
PMI cancellation does not affect your loan terms or monthly principal and interest payments.
Real-Life Example
Consider Sarah, who bought her home in 2021 for $280,000. She has been paying PMI since then. Recently, she checked Zillow and saw her home’s estimated value at $330,000. She also installed a new kitchen and replaced the roof.
Sarah gathered her receipts and photos, then called her servicer. They agreed to order an appraisal through their process. The appraisal came back at $335,000, confirming she had more than 20% equity. Within a month, her servicer canceled her PMI, saving her $150 per month.
Final Thoughts
If you bought a home recently and are still paying PMI, don’t assume you have to refinance to get rid of it. Your home’s increased value and any improvements you’ve made can help you cancel PMI earlier. Start by checking your home’s current value, gather documentation of improvements, and call your servicer to learn their process.
Taking these steps can save you hundreds of dollars each month without the hassle of refinancing. The key is to be proactive and informed. Your home’s value is an asset—use it to reduce your mortgage costs.
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