What is PMI?

PMI is Private Mortgage Insurance and is often attached to a mortgage that is greater then an 80% Loan to value. It can be expensive, but it can also be removed if your property has appreciated in value. Here's the facts that I found on http://www.mortgagequestions.com/:

Can Your PMI Be Removed?
The Homeowners Protection Act of 1998 gives you the right to request cancellation of the private mortgage insurance (PMI) premium that is added to your loan payments. If you do not request cancellation, the law also provides rules for automatic termination of PMI. The law applies to mortgage loans on single family, primary residences originated on or after July 29, 1999 where the borrower is paying the cost of the PMI.For loans closed prior to July 29, 1999, different requirements may exist. To learn about these requirements, email us below.
What is Mortgage Insurance (MI)?
For loans insured by the Veteran's Administration (VA), mortgage insurance ("MI") is typically required on all loans, regardless of down payment. It cannot be cancelled until the loan is paid in full. For loans insured by the Federal Housing Authority after July 1, 1991 mortgage insurance is typically required on all loans based on your **original Loan to Value (LTV) and must remain on the loan until FHA requirements are met. Effective for all loans closed on or after January 1, 2001, most FHA loans will have a provision, which will allow for automatic cancellation of MI when the Loan to Value reaches 78%. For more information regarding your FHA guidelines please contact your local FHA Homeownership center.Mortgage insurance is different from other types of insurance purchased by a borrower and should not be confused with credit life, property, or casualty insurance. Homeowners cannot file a claim against the policy.
What is Private Mortgage Insurance (PMI)?
PMI stands for Private Mortgage Insurance. It is required for all conventional loans when the home buyer puts less than a 20 percent down payment against the **original value of the home. PMI protects the lender against the possible default or foreclosure of the mortgage. This type of insurance is different from other types of insurance purchased by a borrower and should not be confused with credit life, property, or casualty insurance. Homeowners cannot file a claim against the policy. How can I remove PMI from my monthly payments?PMI may be cancelled when certain conditions are met; however, these conditions are specific to your loan, state statutes and lender investor agreements. Some conditions that may determine whether PMI can be dropped from a loan are as follows:
Your Loan To Value Ratio (LTV) Typically this is the loan amount divided by the original value of the property. The lender may allow for current value to be used for PMI removal in some cases.
Age of Loan There is no minimum aging requirement for PMI removal when the original value is used in determining the appropriate LTV.*
Delinquency Your loan must reflect a good payment history and should be current.
Written Removal Request Your request for cancellation must be in writing.

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