Private Mortgage Insurance (PMI)
What is Private Mortgage Insurance (PMI)?
How Does Private Mortgage Insurance (PMI) Work?
Could Obtaining Private Mortgage Insurance (PMI) Help Me Qualify for a Larger Loan?
How Much Does Private Mortgage Insurance (PMI) Cost?
How is Private Mortgage Insurance Paid?
PMI fees can be paid in many ways depending on the company used:
- Borrowers can choose to pay the 1-years premium at closing, and then an annual renewal premium is collected monthly as part of the house payment.
- Borrowers can choose to pay no premium at closing, but add on a slightly higher premium monthly to the principal, interest, tax, and insurance payment.
- Borrowers who want to sidestep paying PMI at closing but don’t want to increase their monthly house payment can finance a lump-sum PMI premium into their loan. Should the PMI be canceled before the loan term expires through refinancing, paying off the loan, or removal by the loan provider, the borrower may obtain the rebate of the premium.
How Does the Buyer Apply for PMI?
What is the History of Private Mortgage Insurance (PMI)?
Cancellation of Private Mortgage Insurance (PMI)
The Homeowners Protection Act of 1998 established rules for automatic termination and borrower cancellation of Private Mortgage Insurance (PMI) for home mortgages. These protections apply to certain home mortgages signed on or after July 29, 1999 for the home purchase, initial construction, or refinance of a single-family home. It does not apply to government-insured FHA or VA loans, or to loans with lender-paid PMI.
With certain exceptions (home mortgages signed on or after July 29, 1999) your PMI must be terminated automatically when 22% of the equity of your home is reached, based on the original property value and if your mortgage payments are current. It can also be canceled at your request with certain exceptions, when you reach 20% equity, again based on the original property value, if your mortgage payments are current.
- If your loan is “high risk”
- You have not been current on your payments within the year prior to termination time or cancellation
- If you have other liens on your property
Ask your lender or mortgage servicer for information about these requirements. If you signed your mortgage before July 29, 1999 you can request to have the PMI canceled once you exceed 20% home equity. But, federal law does not require your lender or mortgage servicer to cancel the insurance.
|Amerin Guaranty Corporation
303 East Wacker Drive, Suite 900
Chicago, IL 60601
|PMI Mortgage Insurance Company
601 Mongomery Street
San Francisco, CA 94111
|Commonwealth Mortgage Assurance Company
1601 Market Street
Philadelphia, PA 19103-2197
|Republic Mortgage Insurance Co.
P.O. Box 2514
Winston-Salem, NC 27102-9954
|G.E. Capital Mortgage Insurance Corporation
P.O. Box 177800
Raleigh, NC 27615
|Triad Guaranty Insurance Corp.
P.O. Box 25623
Winston-Salem, NC 27114
|Mortgage Guaranty Insurance Corporation
P.O. Box 488
Milwaukee, WI 53201
|United Guaranty Corporation
P.O. Box 21567
Greensboro, NC 27420