Rising Equity in Chicago: How a 2025 Appraisal Could Help You Cancel Private Mortgage Insurance (PMI)
If you bought a home in Chicago with less than 20% down, there’s a good chance you’re still paying Private Mortgage Insurance (PMI) every month. What many homeowners don’t realize is that rising home values across the Chicago area may make PMI unnecessary without refinancing.
In 2025, a new home appraisal could be the key to unlocking that monthly savings.
What Is PMI — and Why Are You Paying It?
PMI is required by most lenders when your loan-to-value (LTV) ratio exceeds 80%. It protects the lender, not you, and can add anywhere from $100 to $300 per month to your mortgage payment.
The good news? PMI doesn’t have to be permanent.
According to the Consumer Financial Protection Bureau (CFPB), homeowners can request PMI cancellation once they reach 80% LTV and it must automatically terminate at 78% in most cases, assuming you’re current on payments.
Source: Consumer Financial Protection Bureau – PMI Basics
Why Chicago Homeowners Are Reaching 20% Equity Faster
Chicago’s housing market has been quietly building equity, even without dramatic price spikes.
Factors contributing to rising equity include:
- Steady home price appreciation in many neighborhoods
- Limited housing inventory
- Renovations and upgrades made since purchase
- Paying down your mortgage principal over time
Data from the Federal Housing Finance Agency (FHFA) shows that home values in Illinois have continued to trend upward over the past several years, helping homeowners build equity faster than expected.
Source: FHFA House Price Index
How a 2025 Appraisal Can Help Remove PMI
If your home’s value has increased, your loan-to-value ratio may already be below 80%, even if your lender hasn’t acknowledged it yet.
A professional appraisal:
- Establishes your home’s current market value
- Provides lender-approved documentation
- Can be used to formally request PMI removal
Many lenders require an appraisal ordered by the borrower to verify equity — especially if PMI removal is based on appreciation rather than original amortization schedules.
When Does an Appraisal Make Sense?
You may be a strong candidate for PMI removal if:
- You’ve owned your home for 2+ years
- Comparable homes in your neighborhood are selling higher than when you purchased
- You’ve completed improvements (kitchens, baths, mechanical upgrades)
- You’ve consistently paid down your mortgage balance
An appraiser familiar with Chicago neighborhoods understands how local market conditions, property types, and recent sales influence value — which matters when equity thresholds are tight.
PMI Removal vs. Refinancing: Why an Appraisal Is Often Smarter
Refinancing used to be the default strategy for PMI removal, but in today’s interest-rate environment, it often doesn’t make sense.
An appraisal-based PMI removal:
- Avoids resetting your interest rate
- Keeps your current loan terms intact
- Typically costs far less than refinancing fees
- Can deliver immediate monthly savings
What to Expect Next
If your appraisal supports PMI removal:
- Submit the appraisal to your lender
- Formally request PMI cancellation
- Continue making on-time payments
- Watch your monthly payment drop
Every lender has slightly different requirements, so it’s important to confirm their PMI removal process before ordering an appraisal.
Thinking About a 2025 Appraisal?
Rising equity is one of the few financial wins homeowners can take advantage of without changing loans or taking on new debt. For many Chicago homeowners, a current appraisal is the missing step between paying PMI and keeping that money each month.