When can PMI trully be canceled? From the articles below, I know that the government requires automatic cancellation after 78% LTV is reached - however, that's based on the ORIGINAL value of the home when it was purchased... and that's the tricky part.

LenderReviewBoard
Appraisal Associates

Let's say that a client buys a fixer worth $450k from a probate sell. Suppose it's appraised at $495k, and six months later, after $20k of work, it's reappraised at $515k. Assuming the loan amount is $412k (80%) by that time, is it realistic to expect the lender to allow PMI cancellation?

Specifcially, the lender is Country Wide and the PMI is through a third party.

Thanks for your input.

More than likely they will follow secondary market guidelines. Call CW and ask 'em what their policy is. Lenders usually want a loan to be "seasoned" (a minimum history of timely payments) before they will consider PMI cancellation based on current market value. So, six months is typically NOT a reasonable period of time for a "seasoned" loan.

Since my own home loan is through Countrywide, I can speak on this one!
CW REQUIRES the LTV to be 80%. If your house is increased in value, they require you to have the property appraised ($300), preferably with their appraiser.
Then you can see what happens. If it appraises, good for you. If not, bye bye $300.

79.9%

Just a side note, most lenders require the PMI to be tacked on for a minimum of 2 to 5 years depending on the lender. So check your documentation on that as well. This is regardless of the LTV being reduced to under 80%.

If the lender is Country Wide, chances are you will also have a pre-payment penalty. It could be from 2 to 5 years. Check the Note section of your mortgage.