Removing PMI: When Refinancing Makes Sense

If you’re like many homeowners, you celebrated the day you bought your home — and then discovered a little line item on your mortgage statement: PMI. Private Mortgage Insurance is a helpful tool when you’re getting started, but it isn’t something you’re meant to keep forever.

The real question becomes:

And more specifically:

Let’s walk through how PMI works, how equity grows (especially in areas like Bakersfield and Fresno), and when refinancing becomes a smart strategy—not just an optional one.

PMI is required when a buyer puts down less than 20% on a conventional loan.

It protects the lender, not you, but it allows you to buy a home sooner.

You keep PMI until:

• You reach 20% equity through payments or

• Your home’s value increases enough to bring you to 20% equity or

• You refinance into a loan without PMI

Here’s what surprises most homeowners:

PMI is not tied to time. It’s tied to equity.  And equity can build much faster than you expect.

Both Bakersfield and Fresno have seen strong value appreciation over the past several years thanks to:

• Population growth

• Limited housing supply

• More families moving inland

• Price increases that outpaced many forecasts

In practical terms, a home purchased for $350,000 just a few years ago may now be worth $425,000 or more. That appreciation alone may have pushed many homeowners over the 20% equity threshold — meaning PMI can be removed sooner than expected.  Even modest appreciation of 3–5% per year adds up quickly when combined with your regular principal payments.

Refinancing can be an excellent tool for PMI removal when used intentionally.

✔ You’ve built significant equity through appreciation

If your home value has increased, refinancing can:

• Reset your loan without PMI

• Potentially lower your rate (depending on market)

• Adjust your term to fit your life better

✔ Your current PMI is expensive

Some loans have PMI that costs $200–$400/month.

Removing it through a refinance can create immediate monthly savings.

✔ You want to switch loan types

If you have:

• LPMI

• Split PMI

• A loan with restrictive PMI rules

…refinancing gives you more control.

✔ You want to restructure your mortgage anyway

Removing PMI can be part of a bigger plan, such as:

• Lowering your payment

• Consolidating debt

• Shortening your term

• Moving from an ARM to a fixed rate

When the timing is right, a refinance can clean up multiple financial goals at once.

4. When Refinancing to Remove PMI Doesn’t Make Sense

Not every situation calls for a refinance.

❌ Your current interest rate is significantly lower than today’s rates

You don’t want to give up an excellent rate to save on PMI unless the math supports it.

❌ You’re close to automatic PMI removal

If you’re just months away from hitting 22% equity, refinancing may cost more than it saves.

❌ You plan to move in the near future

If you’re not staying long enough to benefit from the savings, refinancing isn’t necessary.

5. Alternatives to Refinancing

If you want to remove PMI without refinancing, you can request removal by:

• Reaching 20% equity through payments

• Getting a new appraisal showing your home’s increased value

• Confirming you’ve been on-time with payments

This typically saves money if your existing rate is better than market rates today.

Final Thoughts

PMI is designed to be temporary.

The question isn’t if you can remove it — it’s when and how to remove it in a way that works best for your financial season.

A refinance can be a strong option if it:

• Removes PMI

• Reduces payment pressure

• Supports your long-term goals

• Makes mathematical sense

When the numbers align, refinancing becomes more than a tool—it becomes a strategic move that supports your life, not just your mortgage.