Private Mortgage Insurance (PMI) protects the lender when a conventional loan is funded with less than a 20% down payment. Because the borrower has less equity, the lender requires PMI to offset the higher risk.
When can PMI be removed?
- Borrower‑initiated request: Under the Homeowners Protection Act, you can ask for cancellation once the loan balance reaches 80% of the home’s original purchase price (or the appraised value at purchase).
- Automatic cancellation: The lender must automatically terminate PMI when the balance drops to 78% of the original loan amount, assuming you are current on all payments.
Steps to request PMI removal
- Confirm your current loan balance and calculate the loan‑to‑value (LTV) ratio.
- Gather proof of the home’s value. Many lenders require a recent appraisal or a broker’s price opinion.
- Submit a written request to your loan servicer. Include your account number, the date, and a statement that the LTV is at or below 80%.
- Await confirmation. The servicer may verify the appraisal and ensure you have a clean payment history (typically no late payments in the past 12 months).
How to speed up removal
- Make extra principal payments to reach the 80% threshold faster.
- Consider refinancing into a new conventional loan with a lower LTV; the new loan can be structured without PMI.
Nebraska‑specific notes
- Many Nebraska closings are handled by attorneys, which can make obtaining a new appraisal or documentation straightforward during the request process.
- The state’s Housing Development Loan Fund offers first‑time‑buyer assistance that may include options to avoid PMI at origination, reducing the need for later removal.
These guidelines are general information. For personalized advice, contact your loan servicer or a qualified mortgage professional.