When Can You Cancel Private Mortgage Insurance?
Commonly known as PMI, this is a frequent question and one that is more common now due to the recent FHA mortgage insurance changes. Click here to learn more about the benefits of PMI.
How To Cancel Private Mortgage Insurance
Per the Homeowners Protection Act of 1998, it requires automatic termination of mortgage insurance when the principal balance of the mortgage is first scheduled to reach 78% of the original value of the home if the borrower is current. If the borrower is not current on that date, mortgage insurance gets cancelled on the first day of the first month following the date that the borrower becomes current.
Along with automatic termination, you can also request PMI cancellation.
A borrower may initiate cancellation of PMI coverage by submitting a written request to the servicer of the mortgage.
However, per the Homeowners Protection Act of 1998, there are other important criteria you must meet in order to cancel PMI on your loan, such as the following:
- the borrower submits a written cancellation request;
- the borrower has a good payment history;
- the borrower satisfies any requirement of the mortgage holder such as providing evidence in advance that the value of the property has not declined below the original value.
If the value of your home has decreased, you may not be able to cancel PMI.
- And certification that the borrower’s equity in the property is not subject to a subordinate lien. Commonly known as a second mortgage or line of credit.