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How do I cancel mortgage insurance?

Homeowners Protection Act

Mortgage lenders/investors will typically permit the cancellation of private mortgage insurance (private MI), when you build up enough equity in the home.

Because MGIC insures the lender, we cannot cancel MI coverage upon the homeowners' request. You must contact your lender and have them request cancellation.

However, if you've made your mortgage payments on time and have the equity in your home, cancelling your MI shouldn't be difficult at all. In fact, most homeowners cancel their MI long before the automatic termination date. Some even receive refunds when they cancel.

Contact your lender for more information.

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Homeowners Protection Act

(Note: info below provided by the Federal Trade Commission)

The Homeowners Protection Act of 1998 – which became effective in 1999 – establishes rules for automatic termination and borrower cancellation of private mortgage insurance (PMI) on home mortgages. These protections apply to certain home mortgages signed on or after July 29, 1999 for the purchase, initial construction, or refinance of a single-family home. These protections do not apply to government-insured FHA or VA loans or to loans with lender-paid PMI.

For home mortgages signed on or after July 29, 1999, your PMI must – with certain exceptions – be terminated automatically when you reach 22 percent equity in your home based on the original property value, if your mortgage payments are current.

Your PMI also can be canceled, upon your request – with certain exceptions – when you reach 20 percent equity in your home based on the original property value, if your mortgage payments are current. One exception is if you have not been current on your payments within the year prior to the time for termination or cancellation. Another is if you have other liens on your property. A third is the property cannot have declined in value from the original value. For these loans, your PMI may continue. Ask your lender or mortgage servicer (a company that collects your payments) for more information about these requirements.

If you signed your mortgage before July 29, 1999, you can ask to have the PMI canceled once you exceed 20 percent equity in your home. But federal law does not require your lender or mortgage servicer to cancel the insurance.

Our When to ask your lender to cancel your MGIC mortgage insurance flyer can tell you more.

 

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