PMI Cancellation Information - Private Mortgage Insurance

PMI Cancellation

Lenders are required to cancel private mortgage insurance on most home mortgage loans made after July 29, 1999. Cancellation will occur automatically when amortization has reduced the loan balance to 78% of the value of the property at the time the loan was made.

Under another provision of this law, lenders must terminate insurance at the borrower's request when the loan balance hits 80% of the original value. Borrowers who take the initiative can thus terminate their PMI earlier than those who wait. Even under this provision, the wait can be a long one.

With normal amortization, it takes 142 months for the loan balance on a 8% 30-year loan equal to 95% of property value, to fall to 80%. A 15-year loan that is otherwise identical will get there in 47 months. However, borrowers who add to their regular monthly payment will reach the 80% target more quickly.

Keep an eye on your amortization schedules so that you will know how much your balance is. Since even 2% can add up to some significant time, you may be able to save some money by staying on top of things and putting in your request for your lender to drop the PMI.