Bottom-line is if you have mortgage insurance, you don't want it because it doesn't help you at all. You should want to get rid of it as quickly as possible. So here a couple ways to get rid of it.
- When your loan to purchase price reaches 80% you can request your mortgage company cancel the PMI. So if you purchased your home for $100,000 and now your loan has $80,000 balance or less you can request the PMI be removed. Also, when it reaches 78% the lender must automatically cancel the PMI.
- Let's say you got a great deal on your house and/or the value has gone up over the last couple years. You can order an appraisal and have the ratio based on the appraised value instead of the purchase price. For example, you purchase your home as short sale 4 years ago. The purchase price was $120,000, you put 5% down so the original loan amount was $115,000. The current balance is $105,000; 105,000 divided by 120,000 is 87.5%, not enough to remove PMI. But you order an appraisal and the actual value is $170,000, 105,000 divided by 170,000 is 62%, now you can request the PMI be removed. Often times a minimum of 2 years is required before the appraisal can be ordered. Read you mortgage documentation to double-check.
* Note current FHA loan originated in the past year have some additional stipulations