PMI - Private Mortgage Insurance - Can Be Removed

How Do I Cancel Private Mortgage Insurance?

Private Mortgage Insurance has always meant homeowners can buy a home sooner, for less money down. A new federal law assures consumers that they can enjoy the benefits of Private Mortgage Insurance knowing that lenders will cancel it when it is no longer needed.

The law includes two basic consumer protections:

Even without the law, Private Mortgage Insurance generally is cancelable once the homeowner builds up enough equity in the home. Investors set their own cancellation requirements. The mortgage insurance company does not make the decision to cancel insurance.

Your lender can provide you with the requirements for canceling insurance. Just contact the company you send your mortgage payments to for details.

 

How The Law Works

The law is designed to demystify the PrivateMI cancellation process. Here's what the law calls for:

Exception: For mortgages defined as high risk, the lender will automatically cancel the Private Mortgage Insurance at the mid-point of the loan. On a 30-year mortgage, for example, insurance will be canceled after 15 years. Check with your lender about whether your mortgage falls into the high-risk category.

This is just an outline of the Private Mortgage Insurance cancellation law, not legal advice or a legal opinion. Contact your lender for specific information about how the law applies to your mortgage.


FHA and Piggyback Loans Excluded

The law does not apply to the government mortgage insurance program run by the Federal Housing Administration.

The law also does not cover piggyback loans, which include a second mortgage to cover part of the down payment instead of mortgage insurance. Payments on the second loan cannot be canceled and must be paid in full.

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