How do I cancel mortgage insurance?
Law for the protection of homeowners
In general terms, the lenders / investors will allow you to cancel the ("private mortgage insurance," or private MI, for its acronym in English) when you have accumulated sufficient ownership capital in the home.
Since at MGIC we insure the provider, we can not cancel the MI coverage at the request of the owner of the home. You must contact your provider and have the cancellation requested.
However, if you have made your mortgage payments on time and have home equity, the cancellation of the MI should not be complicated at all. In fact, most owners cancel the MI long before the automatic termination date. Some even receive refunds upon cancellation.
above
Law for the protection of homeowners
(Note: the following information was provided by the Federal Trade Commission)
The Homeowners Protection Act of 1998 - which came into effect in 1999 - establishes rules for the automatic termination and cancellation by the borrower of private mortgage insurance (MIP) on real estate mortgages. These protections apply to certain mortgages signed as of July 29, 1999 for the purchase, initial construction or refinancing of single-family homes. The protections do not apply to FHA or VA loans sponsored by the government, nor to loans with MIP paid by the lender.
For real estate mortgages signed as of July 29, 1999, the SHP must - with some exceptions - automatically terminate upon reaching 22 percent of the home equity of the home based on the original value of the property, as long as the payments of the mortgage are up to date.
You can also cancel the SHP if you apply - with certain exceptions - when you reach 20 percent of the home equity of the home based on the original value of the property, as long as the mortgage payments are up to date. One of the exceptions is if you have not been punctual in the payments during the year prior to the time of termination or cancellation. Another exception is if you have other liens on the property. A third exception is if the property has not decreased in value with respect to the original value. For those loans, the SHP can continue. Consult your lender or loan servicer (company receiving the payments) for more information about these requirements.
If you signed the mortgage before July 29, 1999, you can request that the SHP be canceled once it exceeds 20 percent of the home equity. However, federal law does not require that the lender or loan collector cancel the insurance.
