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PMI Calculator
Check whether your lump sum knocks out private mortgage insurance as a bonus savings.
What PMI costs
Private mortgage insurance is required on conventional loans when the loan-to-value ratio exceeds 80%. It typically costs 0.5% to 1% of the loan amount annually. On a $300,000 mortgage, that is $125 to $250 a month, money that goes to an insurer, not your principal or your interest.
The hidden opportunity in a recast
The lump-sum payment you make for a recast directly reduces your LTV. If it brings you below 80%, you may be able to request PMI cancellation, a separate process from the recast that stacks on top of it beautifully. The insight engine on the recast calculator flags this automatically when your numbers cross the 80% line.
The recast does not remove PMI by itself
Contact your servicer separately and request cancellation once your LTV is below 80%. Some servicers require a new appraisal; others use the original value. The Homeowners Protection Act gives you the right to request cancellation at 80% LTV and mandates automatic cancellation at 78%.
LTV math
Loan-to-value is your mortgage balance divided by your home's value. With a $300,000 balance on a $400,000 home you are at 75%, under the 80% line. A lump sum lowers the numerator; a market or appraisal move lowers the denominator. This calculator takes your balance, home value and PMI rate and shows your monthly PMI and where you stand on the 80% line.
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