Private Mortgage Insurance

If you put less than 20 percent down on your home mortgage, your lender may require you to purchase Private Mortgage Insurance (PMI). Private Mortgage Insurance protects the lender if you default on the loan. But did you know that federal law may allow you to cancel that insurance and avoid extra costs?

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. To qualify, you must be current with your mortgage payments.

Your PMI also can be canceled at your request – with certain exceptions – when you reach 20 percent equity in your home. Again, your mortgage payments must be current.

Certain exceptions may apply if your loan is high-risk, if you have not been current with your payments during the past year, or if you have other liens on your property. Ask your lender or mortgage servicer for more information.

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

These protections do not apply to government-insured Federal Housing Administration or Department of Veterans Affairs loans or to loans where the lender paid for PMI.

New borrowers covered by the law must be told – at closing and once a year – about PMI termination and cancellation.

Mortgage servicers must provide a telephone number for all their mortgage borrowers to call for information about termination and cancellation of PMI.

Even though the law doesn’t cover loans that were signed before July 29, 1999, or loans with lender-paid PMI signed on any date, lenders or mortgage servicers must tell borrowers about the termination or cancellation rights they may otherwise have under those loans.

We Can Help

If you have a complaint about private mortgage insurance, contact us toll free within North Carolina at 1-877-5-NO-SCAM.