If you purchased a Utah home with less than 20% down, there is a good chance your monthly mortgage payment includes private mortgage insurance, commonly called PMI.
PMI helped you purchase the home without waiting years to save a larger down payment. That is the good news.
The less exciting news is that you may still be paying for it long after you have built enough equity to explore removing it.
Many Utah homeowners assume PMI will automatically disappear as soon as their home value increases. Unfortunately, mortgage companies generally need confirmation that your house is worth more now.
However, there may be several ways to remove PMI in Utah, depending on your loan type, current balance, payment history, home value, and loan servicer.
What Is PMI?
Private mortgage insurance protects the mortgage lender—not the homeowner—if the borrower stops making payments.
PMI is typically required on a conventional loan when the buyer puts down less than 20%. The cost is generally included in the monthly mortgage payment, although other payment structures may also be available.
PMI is not necessarily a bad thing. It allows qualified buyers to purchase a home without putting 20% down.
For example, waiting to save a 20% down payment could take several years. During that time, home prices, rent, and interest rates may change. PMI can help a buyer enter the market sooner while keeping more money available for moving expenses, repairs, emergencies, or furniture purchases.
Still, PMI is not meant to remain on every conventional mortgage forever.
When Can You Request PMI Removal?
For many conventional mortgages on a primary residence, homeowners can request PMI cancellation when the loan balance reaches 80% of the home’s original value.
The original value generally means the lower of the purchase price or appraised value when the home was purchased. If the mortgage was later refinanced, the original value is usually based on the appraisal completed during that refinance.
To approve the request, the mortgage servicer may require that:
- You submit the request in writing.
- Your mortgage payments are current.
- You have an acceptable payment history.
- There are no additional liens against the property.
- The home has not declined below its original value.
Your servicer may also require a property valuation or appraisal before removing PMI.
In other words, reaching 20% equity does not always make PMI vanish overnight. You may need to ask.
Does PMI Automatically Go Away?
For many conventional mortgages, PMI must automatically terminate when the loan balance is scheduled to reach 78% of the home’s original value.
This calculation is generally based on the original amortization schedule—not the home’s current market value.
The homeowner must also be current on the mortgage. If the loan is not current when it reaches the scheduled cancellation date, PMI may remain until payments are brought current.
PMI must also generally end after the loan reaches the midpoint of its original amortization period, provided the loan is current. On a 30-year mortgage, that midpoint would usually occur after 15 years. This rule can matter for loans with interest-only periods, balloon payments, or other features that slow down principal reduction.
Thankfully, most homeowners would prefer not to wait 15 years to save money.
Can Rising Utah Home Values Help You Remove PMI?
Possibly. Utah homeowners may build equity in several ways:
- Making regular mortgage payments
- Paying additional money toward principal
- Completing meaningful home improvements
- Benefiting from an increase in the home’s market value
If your Utah home has increased in value, you may be able to request PMI removal based on its current value rather than its original value.
However, the rules can vary depending on who owns your mortgage and who services it.
For example, Fannie Mae’s current guidelines generally require a one-unit primary residence or second home to have:
- An LTV of 75% or less when the loan is between two and five years old
- An LTV of 80% or less when the loan is more than five years old
The two-year minimum may sometimes be waived when substantial improvements made by the homeowner increased the property’s value.
These are not universal requirements for every mortgage. Freddie Mac, private investors, mortgage insurers, and individual servicers may have different standards.
That is why the first step is identifying your loan type and asking your mortgage servicer about its specific PMI removal process.
Do You Need an Appraisal to Remove PMI?
You may need one, but do not order an appraisal on your own before speaking with your mortgage servicer.
The servicer may require that the valuation be ordered through its approved process. An appraisal completed independently may not satisfy the investor’s requirements.
Depending on the loan, the servicer might use:
- An automated valuation model
- A broker price opinion
- A drive-by valuation
- A full interior and exterior appraisal
The homeowner may also be responsible for the valuation fee.
Before paying for anything, ask the servicer:
- Can I request PMI removal based on the original value or current value?
- What LTV is required?
- Is there a minimum amount of time I must have the loan?
- What payment history is required?
- What type of property valuation will you accept?
- How much will the valuation cost?
- Will you order it, or should I?
This five-minute phone call may prevent you from purchasing an appraisal that your servicer cannot use. Mortgage paperwork already gives us enough opportunities to pay for the wrong thing.
Should You Refinance to Remove PMI?
Refinancing may make sense if you have enough equity to qualify for a new conventional loan without PMI.
It may also create opportunities to:
- Change the loan term
- Consolidate higher-interest debt
- Remove or add a borrower
- Switch from an adjustable rate to a fixed rate
- Access equity for improvements or other needs
However, refinancing is not automatically the best solution.
Before refinancing, compare at least two scenarios:
How Much Could Removing PMI Save?
The potential savings depend on the mortgage balance, PMI rate, and loan structure.
For example, if a homeowner pays $175 per month in PMI, removing it could save:
- $2,100 per year
- $6,300 over three years
- $10,500 over five years
That is real money.
It could help cover home maintenance, utilities, property taxes, insurance increases, or approximately four trips to Costco where you only went in for paper towels.
Your actual savings will depend on how long PMI would otherwise remain on the loan.
Is It Time for a Utah Mortgage Review?
You may have a path to remove PMI if:
- You purchased your Utah home with less than 20% down.
- Your home has increased in value.
- You have made substantial improvements.
- You have paid down your mortgage balance.
- Your loan is at least two years old.
- You have a strong mortgage payment history.
- You currently have an FHA loan and may qualify for a conventional refinance.
Not every homeowner will qualify immediately. Still, it may be worth reviewing the numbers.
Sometimes the answer is to request PMI removal now. Sometimes it is to wait a few more months, pay the balance down to a specific amount, or complete a refinance when the savings justify the costs.
The important part is knowing your options instead of continuing to pay mortgage insurance simply because no one told you to check.
Let’s Review Your Mortgage and Equity
Not sure whether you can remove PMI from your Utah mortgage?
Houzd Mortgage can help you review your current loan, estimated equity, mortgage insurance, and available options. We can also help you compare requesting PMI removal with refinancing so you can see which path may make the most financial sense.
There is no universal answer because every loan, property, servicer, and homeowner is different.
But if there is an opportunity to lower your monthly payment, it is worth running the numbers.
Contact Houzd Mortgage at 801-206-4343 to start the conversation.
This article is for general educational purposes only and is not a commitment to lend. PMI and MIP cancellation requirements vary by loan program, investor, mortgage insurer, servicer, property type, payment history, and other factors. Contact your loan servicer for the requirements that apply to your current mortgage. Equal Housing Opportunity. Company NMLS 888979.
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