What is PMI, and how do you get rid of it?

Private mortgage insurance protects the lender against your default, and you pay for it, typically when a conventional loan starts with less than 20 percent down. It commonly costs a few hundred dollars a month on a mid-priced home, buys you nothing directly, and exists purely to let lenders accept smaller down payments, which, to be fair, is what gets many buyers in the door years earlier.

The exit is written into federal law, the Homeowners Protection Act: PMI must terminate automatically once the balance amortizes to 78 percent of the original value, and you can request cancellation at 80 percent, sooner if appreciation or extra payments got you there, usually with an appraisal to prove it. Set a reminder rather than trusting the servicer's enthusiasm. FHA loans play by different rules; their mortgage insurance often runs the life of the loan, and refinancing into conventional is the standard escape.