Mandatory Cancellation - Most conventional loans require that the monthly mortgage insurance be cancelled when your loan balance reaches 78% of the original value of your property as determined at time of closing. You should’ve received a notice at closing from your lender of the date this balance is expected to be reached.
Borrower Requested Cancellation - You have the right to request of the lender that mortgage insurance be cancelled either at the date the principal balance is scheduled to reach 80% of the original value of the property as determined at closing or as of the date the principal balance actually reaches 80% of the value of the property. To be eligible for the lender to consider this request, the following conditions must be satisfied:
You make a written request to the lender for cancellation. You have not been 60-days late on a mortgage payment in the last 2 years or 30-days late in the last 12 months. You are current on payments. You provide, at your expense, evidence satisfactory to the lender of the current value of the property establishing the 80% value requirement. Satisfactory evidence is generally a new appraisal of the property, if a new appraisal is required, the lender will need to order it and will usually bill you for it. If you order the appraisal on your own, it may be rejected and you will not be reimbursed.
The lender is not required to cancel the insurance even if these conditions are met until the mandatory cancellation requirements are reached, but most lenders will typically give favorable consideration to such requests.
Contact a Loan Officer for further information.