At what point can I remove the Private Mortgage Insurance (PMI) from my loan?
The Homeowners Protection Act of 1998 requires lenders to provide certain disclosures and cancel PMI under certain conditions. Prior to this Act becoming law, cancellation of PMI was at the lender’s discretion. The Act stipulates that for loans made after July 29, 1999, the borrower may request to have PMI cancelled under the following conditions:
- The loan has not been more than 60+ days past due in mortgage payments within the last two years or 30+ days past due within the last year.
- There has not been a property value decline based on the actual sales price or original appraised value. The lender may require evidence that the property has not declined in value, which could result in a new written appraisal obtained by the lender at the expense of the borrower.
- There are no subordinate liens, such as a second mortgage.
- The loan-to-value (LTV) ratio reaches 80 percent based on actual payments or initial amortization schedule and initial appraised value.
If the borrower is current on mortgage payments, PMI must be cancelled automatically once the LTV reaches 78 percent based on the original amortization schedule or when the midpoint of the amortization period is reached (i.e., 15 years on a 30-year mortgage).
To request cancellation of PMI, you should contact your loan servicer when the loan balance falls below 80 percent of your home’s original value (the contract sales price or the appraised value of your home at the time it was purchased). This date appears on a PMI disclosure form that was provided by the lender.
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