When Will PMI Be Removed From My Loan

Dated: 01/04/2015

Views: 409

Private Mortgage Insurance (PMI)... when will it be removed from my loan?

You must be in good standing in paying your monthly mortgage in order for PMI to be either 1)cancelled or 2)terminated. This rule apply to mortgages closed on or after July 29, 1999.

1)Request PMI cancellation

When you reach the date that the principal balance of your mortgage is scheduled to fall to 80 percent of the original value of your home, The Homeowners Protection Act gives you the right to request that your lender cancel PMI. This date should have been given to you in writing on a PMI disclosure form when you received your mortgage. If you can't find the disclosure form, contact your lender.

You can also make this request earlier if you have made additional payments to reduce the principal balance of your mortgage to 80 percent of the original value of your home.

There are other important criteria you must meet if you want to cancel PMI on your loan:

Your request must be in writing.
You must have a good payment history and be current on your payments.
Your lender may require you to certify that there are no junior liens (such as a second mortgage) on your home.
Your lender can also require you to provide evidence (for example, an appraisal) that the value of your property hasn’t declined below the value of the home when you first bought it. If the value of your home has decreased, you may not be able to cancel PMI.

If you meet these requirements your servicer generally must cancel your PMI when you request it.

2) Automatic PMI termination
Even if you don’t ask your lender to cancel PMI, your lender still must terminate PMI on the date when your principal balance is scheduled to reach 78 percent of the original value of your home. You also need to be current on your payments on the anticipated cancellation date. Otherwise, PMI will not be terminated until shortly after your payments are brought up to date.

It’s worth noting a termination request is different than a cancellation request. Your lender must terminate PMI even if the principal balance of your loan has not actually reached 78 percent of the original value of your home – for example, because the value of your home declined.

Final PMI termination
There is one other important requirement that some homeowners need to be aware of: your lender must terminate PMI if you reach the midpoint of your loan’s amortization schedule before the 78 percent date. The midpoint of your loan’s amortization schedule is halfway through the life of your loan. Most loans are 30-year loans, so the midpoint would occur after 15 years have passed.

For people who have a mortgage with an interest-only period, or a balloon payment, termination of PMI at the loan’s midpoint may occur before reaching 78 percent of the original value of your home. Keep in mind that you must be current on your monthly payments for termination to occur.

If your loan is guaranteed by the Federal Housing Administration (FHA) or Department ofVeterans Affairs (VA), these rules generally won’t apply. If you have questions about mortgage insurance on an FHA or VA loan, contact your lender.

If you have lender-paid mortgage insurance, different rules apply.

For more inquiries about PMI, please contact your lender.

Florida Rodriguez, Realtor
443-739-4455
Homeset Realty
410-602-3232 ext 520

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Florida Rodriguez

We just purchased our first home today and I cannot thank Florida enough for all her help. She is very professional and very thorough in assisting us since day 1. She always make herself available and....

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