How to Avoid PMI With Refinance
- 1). Determine if you home's value has appreciated to the point that you owe less than 80 percent of the value. You can get a rough estimate of your home's value by comparing it to sales prices in your area, but to convince a lender you will usually have to have your home officially appraised. If you home's value has appreciated enough that you have at least 20 percent equity, you can refinance without paying PMI.
- 2). Determine whether you are likely to get a lender to not charge you PMI when you refinance based on your creditworthiness. According to Bankrate, this is more likely for consumers who have a spotless record of mortgage payments, are close to having 80 percent equity, and have high credit scores and stable jobs.
- 3). Call lenders to find one that holds onto the mortgages it originates rather than immediately reselling them. Lenders that hold on to mortgages are more likely to let you slide on PMI because they do not have to convince buyers that the loan will be repaid.
- 4). Ask lenders who keep loans on their books if they will allow you to refinance without PMI. Lenders will not volunteer this opportunity, but may be willing to work with you.
