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How do you cancel home loan insurance?
I’ve heard that once you build up a certain amount of equity on a house, you don’t have to pay PMI anymore. Is that true? How do you cancel home loan insurance?
Melanie Mergen · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
That’s correct! If you’ve met the necessary requirements and you’re ready to end your home loan insurance, you can start by submitting a cancellation request to your lender in writing.
Thanks to federal law (see the “PMI Cancellation Act”), once the principal amount on your mortgage has reached 80% of your home’s original value, you have the right to request your lender get rid of your
private mortgage insurance
(PMI). The estimated date you’re expected to reach this point by paying on time should be listed in your home loan’s disclosures, but you can request to cancel PMI sooner if you’ve been paying ahead on your mortgage.
Courtesy of the Consumer Financial Protection Bureau, here are some additional factors to consider:
- Your cancellation request has to be in writing
- You should be current on your payments
- Your lender can require you to prove your home’s current value hasn’t depreciated below its original value (which could impact your ability to cancel PMI)
- You might need to attest you don’t have any junior liens, like a second mortgage, on your property
If you don’t make a cancellation request and your payments are up to date, your lender still needs to cancel your PMI by the date the loan’s principal balance was scheduled to reach 78% of your home’s original value, or once you’ve reached the halfway point of the loan term.
As your life changes, sometimes your insurance coverage needs do, too. If you’re looking to begin a search for new home insurance quotes,
Jerry
can help make the process quick and easy! You can even bundle with your car insurance
for additional savings.View full answer
- Gregory R.
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Jerry partners with more than 50 insurance companies, but our content is independently researched, written, and fact-checked by our team of editors and agents. We aren’t paid for reviews or other content.
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