There is a lot of confusion regarding when mortgage insurance goes away these days. Here's what you need to know:
If the loan is a conventional loan (meaning it is NOT an FHA loan), then mortgage insurance goes away once the borrower has 22% equity in the property (based on the purchase price).
A borrower can request that the mortgage insurance go away if they have 20% equity in the property, but they will need to pay for a new appraisal to prove that they have 20% equity. The equity in this case is based on the appraised value, not the original purchase price. The lender does not have to honor the request for the mortgage insurance to go away early, but they usually do.
For FHA loans, the mortgage insurance never goes away if the borrower put less than 10% down, and it goes away after 11 years if they put 10% or more down. There is no option to get a new appraisal and have the mortgage insurance go away early with FHA loans.
It is important to note that the old rules for FHA mortgage insurance are still in effect for FHA loans that had a case number assigned on or before June 3, 2013. In that case, the mortgage insurance goes away once the borrower has 22% equity in the property, or after 5 years, whichever is later.
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