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Mortgage insurance might be one of the costs that you most hate to pay when you send in your mortgage payment each month. It's not necessarily because of the expense – it’s because this insurance doesn't cover you. Instead, it protects your lender in case you default on your loan. The good news is that you don’t have to pay mortgage insurance forever. Once you build up at least 20% equity in your home, you may be able to cancel your mortgage insurance.
Keep reading, as we’ve answered some simple questions for you here about Mortgage Insurance (MI).
When can I cancel my mortgage insurance?
Private MI is there only as long as it’s needed. When the balance on the mortgage reaches 80% of the home’s original value or its current appraised value, the homeowner may request cancellation of their mortgage insurance.
Private MI is there only as long as it’s needed. When the balance on the mortgage reaches 80% of the home’s original value or its current appraised value, the homeowner may request cancellation of their mortgage insurance.
You must have a good payment history on the mortgage loan, payments must be current and there can be no other loans against the home. Some lenders will also require a verification that the property did not decrease in value.
This applies to conventional mortgages and presently does not apply to FHA mortgages.
How do I cancel my mortgage insurance?
To cancel your MI, you should first gather some basic information for your mortgage lender, including:
To cancel your MI, you should first gather some basic information for your mortgage lender, including:
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Any names on the loan
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Social Security numbers
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Property address
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Loan number
From there, you can then contact your lender to request information on the specific cancellation requirements. Sometimes, additional information on the home or loan may be needed along with having an appraisal. Once that’s complete, you will want to send a request in writing to your mortgage lender letting them know you want to cancel your MI plan.
Does my mortgage insurance get cancelled automatically?
Yes, when the mortgage balance reaches 78% of the homes original value and all payments are current, the lender is required to cancel the mortgage insurance automatically.
Yes, when the mortgage balance reaches 78% of the homes original value and all payments are current, the lender is required to cancel the mortgage insurance automatically.
Do I get a refund on my mortgage insurance?
You may be eligible for a refund of the mortgage insurance premiums when the MI policy is cancelled. It depends on the type of MI product you have and other criteria.
You may be eligible for a refund of the mortgage insurance premiums when the MI policy is cancelled. It depends on the type of MI product you have and other criteria.
If you have further questions or concerns about your mortgage insurance, don’t hesitate to contact us. We’re here to help you every step of the way, from purchasing to MI and everything in between.
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