“Hi Gary. I bought a home 3 years ago with 10% down and I’ve been paying PMI [private mortgage insurance]. I know PMI insures lenders against loss on low down payment loans. But my home value is way up, so I think they no longer have any risk. Can I cancel my PMI?”
***ANSWER:
Lenders must automatically cancel a borrower’s private mortgage insurance, if paid by them directly, when:
- The borrower’s mortgage balance is scheduled to reach 78% of the home’s original value, AND
- The borrower is current on payments.
Borrowers can also send their lender a written request to cancel their PMI when:
- Their loan balance reaches 80% of the original value of the home, AND
- They have a good payment history, AND
- They have no other loans taken out on their home, AND
- The value of their home has not declined.
Borrowers are entitled to a refund of the unearned portion of the premium they paid when their private mortgage insurance is cancelled. Lenders must transfer the refund to them within 45 days of cancellation.
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