How to drop mortgage insurance?
We bought our house in 2002 for $79,900. Because we put no money down, we had to obtain Mortgage insurance. If I understand correctly, this would have to be carried as long as their was less than 20% equity in the home.
When we bought the house, there was fear that the local Navy base would close and people were selling their homes to anyone who could breath. We got our house cheap and with a 5.7% fixed interest rate.
The base stayed open and close to 2,000 jobs have been added. Home construction is booming here. At last check, Zillow.com says our house is worth $171,000 after falling from a high of $206,000.
My question is, shouldn't I be able to drop the mortgage insurance? If so, how do I go about doing it? I have heard it is almost a nightmare to have it dropped. I have not taken out any loans against the house and have paid an additional $100 on my principle almost every month.
Best Answer - Chosen by Voters
According to federal law (the Homeowners’ Protection Act), it can be canceled the date the remaining principle balance of the loan is first scheduled to reach 80% of the original value of the property, or the date the principle balance actually reaches 80%. There are also stipulations including requirements for a good payment history and no subordinate liens.
Source(s):
http://www.omninerd.com/articles/Cancel_…
In order to remove PMI you have to have left 80% from the original purchase price not by the value. Meaning when the principal is at $39950 or less, once you reach that you can contact your lender to apply for the removal of the PMI payment.
Source(s):
Housing Counselor
