Ask the servicer about cancellation on the existing loan before refinancing solely to remove PMI. Keeping the current rate and ending eligible PMI may be different from replacing the mortgage. FHA MIP and lender-paid insurance have different rules.
Identify the insurance and the applicable rule
Find the loan type, insurance structure, original value, origination date, and insurance disclosure. The CFPB describes borrower-requested cancellation at 80% of original value for covered conventional loans, subject to conditions. Scheduled 78% automatic termination generally requires current payments; midpoint rules can also apply.
Those rules do not mean a new online value estimate automatically cancels insurance. Ask the servicer for the requirements in writing, including payment history, lien status, valuation, and any current-value investor option. Do not apply the same rule to FHA mortgage insurance.
Get the cancellation answer before paying refinance costs
Request the process, expected charge, documentation, and review timeline from the servicer. Ask whether an additional principal payment would help and whether the payment needs to reach a specific eligible balance. Keep copies of the request and response.
A conventional fixed-rate mortgage with favorable terms may deserve a cancellation review even when new rates are being advertised. A refinance should still solve a financing goal after its costs are included.
Compare the loan you keep with the loan you replace
For the keep option, model the current P&I and only the insurance charges the servicer expects to remain. For the replacement, include the new balance, term, rate, insurance, and transaction fees. Compare both options at the same future date.
The detailed refinance calculator holds each entered monthly MI amount constant until payoff. If cancellation is expected during the comparison period, use separate scenarios or request a custom schedule. It does not predict a servicer’s cancellation decision.
Be careful with a term reset
A lower payment can combine insurance removal with a slower payoff. Ask for a refinance that preserves your intended payoff timeline as well as any longer-term alternative. The extra-principal comparison helps separate payment flexibility from debt payoff.
If the only attractive change is eliminating PMI that the servicer could cancel without replacement, the new closing costs deserve scrutiny. Conversely, a refinance may address rate, term, borrower, or program goals in addition to insurance.
A first screen, not the complete answer
Assume PMI costs $140 monthly. If a $250 servicer-approved valuation process resulted in cancellation, the simple charge-to-payment screen would be about 1.8 months. A refinance with $5,000 of transaction costs and the same isolated $140 reduction would screen at about 35.7 months. These hypothetical figures assume successful cancellation and ignore all other rate, term, balance, and fee differences.
Bring these details to a review
- Loan type, insurance disclosure, original value, and current balance.
- Written servicer cancellation requirements and charges.
- Replacement quote with fees, insurance, term, and remaining-debt comparison.
Common questions
Does 20% current equity always remove PMI?
No. Original-value rules and current-value investor options differ, and the servicer must confirm eligibility.
Can I use FHA MIP rules from this example?
No. FHA insurance requirements depend on the applicable FHA rules and loan terms.
Continue with the relevant guides
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Sources checked October 28, 2026. Agency rules and a lender’s own product descriptions are different sources; lender examples do not establish availability through Aaron. Examples are original hypothetical illustrations, not client results. Actual eligibility, pricing, costs, and terms require review.