Provided by Joseph V. Curatolo
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 percent 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 percent 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 percent 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.
Joseph V. Curatolo is president of Georgetown Capital Group, 5350 Main St., Williamsville (phone: 633-9800, toll-free 1 (800) 648-8091, fax 633-9789, www.georgetowncapital.com).
Representatives offer Securities and Advisory Services through Royal Alliance Associates, Inc., Member FINRA/SIPC and a registered investment advisor.
Georgetown Capital Group is independent of Royal Alliance Associates, Inc., with separate ownership, and is not registered as a broker-dealer or investment advisor.
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