By John Rapasky
A common question for those who have private mortgage insurance (“PMI”) is when can I stop paying it? If you recently obtained a FHA loan, unfortunately, you cannot get out of mortgage insurance as it stays with the loan for the life of the loan. However, if you have a conventional loan, Federal Law provides for when PMI can be removed. This is governed by the Homeowners Protection Act (“Act”).
The Act provides two ways PMI can be canceled: the borrower requests it to be canceled; or it is automatically terminated. The borrower can request cancelation when the principal balance of the loan (based on actual payments) reaches or is first scheduled to reach 80 percent of the original value of the home. Alternatively, PMI automatically terminates when the principal balance of the mortgage is first scheduled to reach 78 percent of the original value of the home. Here is a link to the Act on the Federal Reserve’s website: http://www.federalreserve.gov/boarddocs/supmanual/cch/hpa.pdf. To cancel PMI, contact your servicer.
If you have any questions on mortgage insurance, whether you should refinance to get out of mortgage insurance, or contact the servicer and request to have it terminated, give us a call and we’ll be happy to help.
John Rapasky is the President of the Counsel Mortgage Group, LLC. Copyright © 2015 Counsel Mortgage Group, LLC All rights reserved.
MB# 0909580 NMLS# 178927 AZ LO# 0911590 NMLS LO# 179539