FAQ - How to Cancel Mortgage Insurance
Here's a useful blog that can help you bring down the cost of your mortgage costs either now, or in the future, depending on your particular situation. And for homeowners that currently have an FHA they don't want to refinance out of, hopefully policy will change in the future to allow PMI cancellation of some sort from FHA mortgages.
-Todd J Garrigus
How to Cancel Mortgage Insurance
If you've ever wondered how to cancel PMI, there are a few ways to go about it. Nearly every option comes down to equity, timely payments, and the amount of time that's passed since a mortgage was originated.
For certain loans (such as FHA), the only way to cancel PMI is to refinance.
While this option can sometimes offer a benefit - especially if in addition to getting rid of or reducing the price of PMI a borrower is also reducing their interest rate or loan term - it can also be an expensive option with closing costs adding up to a few thousand dollars.
For conventional loans, though, there are low cost, low hassle options on how to cancel PMI (private mortgage insurance). Really, there are 3 solutions that cover what most every lender/investor offer up as ways to get rid of that pesky (and costly) policy.
- Expedite payments and pay down the mortgage principal
- Increase equity in the subject property. This can be done with additional payment toward principal, home renovations, or a naturally appreciating real estate market. The best bet for the quickest removal of PMI is a combination of the 3.
- Letting time pass. Thanks to the Homeowners Protection Act of 1998, lenders have a legal requirement to remove PMI after a certain time period has passed & equity level has been reached.
If you're curious about the details of cancelling PMI, and want some info (for yourself or your clients) regarding the time frames, requirements, steps to take, and more, you can read up on my most recent blog post at jmloans.com where I go much further into detail on the ways people can eliminate the PMI from their mortgage.
This is great info to bookmark for clients who purchase with less than 20% down, or anyone planning to refinance without quite enough equity to get away with no PMI, so please feel free to bookmark and share.
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