When to Cancel Private Mortgage Insurance (PMI)
You can request cancellation of Private Mortgage Insurance (PMI)
Your Right to Cancel Private Mortgage Insurance (PMI)
The Homeowner's Protection Act offers homeowners the right to cancel Private Mortgage Insurance under certain circumstances. The law also has some specific automatic cancellation abilities if the Private Mortgage Insurance PMI) is paid directly by the consumer.
Here is how to request cancellation of your Private Mortgage Insurance(PMI)
1) You can send your lender a written request to cancel your Private Mortgage Insurance PMI) when your mortgage balance reaches 80% loan-to-value (you have 20% equity), based on the original value of the property, you have a good payment history, you have no other loans taken out on your home and the property value of your home has not declined. You may be required to obtain a new appraisal at your expense to verify the value of your home.
The law requires that your Private Mortgage Insurance PMI) be canceled automatically when your loan-to-value ratio reaches 78%. Your lender is required to automatically drop your Private Mortgage Insurance when your loan equals 78% of your homes value.
You were informed, in writing at your mortgage closing, that you have Private Mortgage Insurance. This disclosure provides information regarding cancellation guidelines and how to go through the cancellation process. Throughout the life of your loan, your lender should notify you annually of your rights regarding private mortgage insurance. Sample
If your request for Private Mortgage Insurance (PMI) cancellation is denied, your lender should inform you in writing of the reason.
The law does not cover loans closed prior to July 29, 1999. If you have Private Mortgage Insurance on a mortgage that was closed prior to July 29, 1999, you may still be able to get your PMI canceled. If you believe that you have 20% equity in your home, contact your lender's Mortgage Servicing Department in writing or by e-mail. The contact information is the same address as where you send your payment.
Sample Private Mortgage Insurance Annual Disclosure