A common question for those who have private mortgage insurance (“PMI”) is when can I stop paying it? When can I get out?
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 (to cancel PMI, contact your servicer); or it is automatically terminated. The borrower can request cancellation 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.
If you have any questions on mortgage insurance, whether you should refinance to get out of mortgage insurance, give us a call and we’ll be happy to help, or contact the servicer and request to have the policy terminated.
See link for Act on the Federal Reserve’s website: https://www.federalreserve.gov/aboutthefed/fract.htm
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