How long will I have to pay for private mortgage insurance?

It depends. There are generally two ways that private mortgage insurance (PMI) can be removed from your mortgage loan. The first is if you request PMI cancellation directly from your lender. The second is through termination by your lender.

You can request PMI cancellation directly from your lender once you have reached the date when the principal balance of your mortgage is scheduled to fall to 80% of the original value of your home. You can find this date on the PMI disclosure form that was given to you when you first obtained your mortgage. The cancellation request can be made earlier if you have made additional mortgage payments that have reduced your principal balance to 80% at an earlier date. Your lender may also require you to meet certain other criteria in order to cancel your PMI, such as certification that there are no subordinate liens on the home and evidence that the property has not declined below the original value.

If you don’t request PMI cancellation directly from your lender, your PMI could still be removed from your loan if it is terminated by your lender. Your lender is required to terminate PMI on the date when the principal balance on your loan is scheduled to reach 78% of the original value of your home or once you reach the midpoint of your loan’s amortization schedule (e.g., year 15 of a 30-year loan), whichever occurs first.

Unfortunately, some mortgage companies don’t always follow the rules pertaining to PMI termination and continue to collect PMI premiums from borrowers beyond the termination date. As a result, many borrowers find themselves paying unnecessarily for PMI. (Source: Private Mortgage Insurance Cancellation and Termination, Consumer Financial Protection Bureau Compliance Bulletin, August 2015) If you think you have reached, or are about to reach, the point in your loan where PMI cancellation or termination is a possibility, you should contact your mortgage lender for more information.

Keep in mind that the above rules regarding PMI apply to borrowers who are current on their loans and apply only to conventional mortgage loans closed on or after July 29, 1999.

If you have questions or need assistance, contact the experts at Henssler Financial:

• Experts Request Form
• Email: experts@henssler.com
• Phone: 770-429-9166

Disclosures: The following information is reprinted with permission from Forefield, a division of Broadridge Financial Solutions, Inc. This article is meant to provide valuable background information on particular investments, NOT a recommendation to buy. The investments referenced within this article may currently be traded by Henssler Financial. All material presented is compiled from sources believed to be reliable and current, but accuracy cannot be guaranteed. The contents are intended for general information purposes only. Information provided should not be the sole basis in making any decisions and is not intended to replace the advice of a qualified professional, such as a tax consultant, insurance adviser or attorney. Although this material is designed to provide accurate and authoritative information with respect to the subject matter, it may not apply in all situations. Readers are urged to consult with their adviser concerning specific situations and questions. This is not to be construed as an offer to buy or sell any financial instruments. It is not our intention to state, indicate or imply in any manner that current or past results are indicative of future profitability or expectations. As with all investments, there are associated inherent risks. Please obtain and review all financial material carefully before investing. Henssler is not licensed to offer or sell insurance products, and this overview is not to be construed as an offer to purchase any insurance products.