Getting Rid of Private Mortgage Insurance

What are some ways to go about ending your private mortgage insurance early?

1 Answer

There are several ways MI (mortgage insurance) can be canceled.

  • Automatically. Under federal law, your mortgage insurance will automatically be canceled on the day your loan is scheduled to reach 78% of its original principal amount. Depending on what type of loan you have, this can be many years due to the front loaded interest curve.

  • Borrower initiated after five years. If you get your house appraised after five years of ownership and your balance is under 80% of the initial balance, you can apply to cancel your MI.

  • Borrower initiated after 2 years. Same as above, but you have to be under 75%.

  • Special conditions. If you make bona fide upgrades to your home that greatly increase the value, you can apply to have your MI dropped any time after upgrades are completely and the value has increased. The original appraisal will be compared to the new appraisal to ensure significant upgrades were actually made.

NOTE: these are MGIC's and Fannie Mae's guidelines. Different states may also have different guidelines. In any event, you should initiate your quest to cancel your MI with your LOAN SERVICER. This is the entity to whom you make your payments.

Here is a link to Fannie Mae's guide on MI cancellation if you're interested in some more detailed reading.