Cancelling PMI Rules

[Alex Bush]

Hi everyone, I'm a new investor and am still at the house hacking phase with my first single family house here in Houston TX. 

I bought the house a couple of years ago with 5% down payment which or course means I have a PMI attached to my mortgage payments.

Lately my house appreciated in price a lot and I thought I could cancel the PMI since this is what I hear investors, here on this forum and the podcast, do quite often when they get to 20% of equity ownership in the property. In my case I think I'm at ~23-25% of equity relative to mortgage principle remaining.

So I reached out to my lender and was surprised to hear this:

> Hello, we do not remove PMI based on market values. You would have to provide proof of home improvements that would qualify for a new home appraisal from our escrow department. If you are interested please advise.

Are they right and did I completely misinterpret it? I thought I could ask for cancellation of PMI just based on increased market value of the property, not only forced appreciation?

If I'm wrong and it's the "home improvements" that they want to see, can I just make some minor cosmetic changes like new sink/bathtub/paint and then ask them for re-appraisal and since the current market value of the property is much higher it will still get appraised higher and my PMI will be cancelled?

[Sergey A. Petrov]

They are correct- you need to either pay down the principal or make major capital improvements. Little fixes don't qualify. If you really believe you have 25% equity you can refi to a new mortgage without PMI but your rate will likely be higher given today's rates…