Unlike FHA and other government-operated mortgage insurance, which cannot be cancelled, private MI paid for by the borrower can be cancelled, leading to potential savings over the life of their loan.
MI can be cancelled in two ways:
- When a borrower has a good payment history, is current on their payments, and the loan is scheduled to reach 80 percent of the original value, they can initiate the cancellation process for borrower paid MI by notifying their servicer. Cancellation is subject to certain conditions established by the mortgage holder, including an appraisal and requirements that there be no subordinate liens.
- Borrower paid MI terminates when the mortgage is scheduled to reach 78 percent of the original value of the property and the borrower is current on payments.
For more information on the differences between PMI and FHA MI, click here.