Mortgage lenders/investors will typically permit the cancellation of private mortgage insurance (MI), when you build up enough equity in the home. With market values up double digits this past year there is a chance that you may be able to cancel your mortgage insurance earlier than you thought.
If you’ve made your mortgage payments on time and have the equity in your home, cancelling your MI shouldn’t be difficult at all. In fact, most homeowners cancel their MI long before the automatic termination date.
There is an important distinction between mortgage insurance on a conventional loan and an FHA or VA loan which do not have the same rules. Mortgage insurance for recent FHA loans often remain through the term of the loan and only way to get rid of the mortgage insurance refinance.
The general rule is if you make regular payments only and the loan balance is 78% of the original value – the mortgage insurance is automatically canceled.
You can request to have your mortgage insurance canceled if the value of your home has increased and your loan-to-value is less than 80%. This will involve working with your current servicer/lender and may involve an appraisal to confirm value.
This link provides an excerpt from the Homeowners Protection Act as well as a link to one of the major mortgage insurance companies brochure containing more detail. http://homebuyers.mgic.com/resources/cancel-mi.html
If you have questions please give me a call.