3 ways to cancel pmi

Automatic Termination

Requirements

PMI must be automatically terminated on the earliest date when

1.       the principal balance of the mortgage is first scheduled to reach 78 percent of the original value and,

2.       the borrower is current on the mortgage payments.

Original value is the lesser of the sales price of the secured property, as reflected in the purchase contract, and the appraised value at the time of loan consummation.

Borrower-Requested Cancellations

Requirements

1.       Borrower submits a written request

2.       The PMI must be canceled when the principal balance of the loan is first scheduled to reach 80% of the original value based on the initial amortization schedule for a fixed rate loan or current amortization schedule for an adjustable rate loan; or when the principal balance has reached 80 percent of the original value based on actual payments.

3.       Borrower must have a good payment history

4.       Borrower must meet creditor’s previously agreed upon certification standard to show that the value of the property has not declined below the original value and that borrower’s equity in the property is not subject to a subordinate lien.

Final termination

If PMI was not eliminated by either the borrower requested termination or the automatic termination, the final termination provision requires that PMI be terminated on the first day of the month following the midpoint of the loan’s amortization period as long as the borrower is current.