Under the Homeowners Protection Act of 1998 (“HPA”), you may not be required to pay MI premiums for the life of your loan. This federal law established provisions for the cancellation and termination of borrower-paid MI (“BPMI”) after certain conditions have been met. The HPA and separate options to cancel BPMI under servicing guidelines used by your servicer apply to many mortgages and property types; talk to your servicer for details on your specific situation.

For many BPMI policies, your loan servicer is required under the HPA to notify the private mortgage insurer to terminate the policy without any action on your part once the principal balance of the mortgage is first scheduled to reach 78% of the property’s original value based on the loan’s initial amortization schedule or, if the loan is not current on that date, on the date that the loan becomes current.  For many loans, if paid current, MI coverage is subject to final termination following the date that is the midpoint of the loan’s amortization period.

You can request cancellation of your BPMI when the principal balance on your mortgage is first scheduled to reach 80% of the property’s original value based on the loan’s initial amortization schedule, or reaches 80% of the property’s original value based on actual payments. To qualify for cancellation of BPMI, you’ll need, among other things, a written request to your servicer to initiate cancellation, a good payment history, and evidence that the property’s value has not declined below the original value.  In addition, the property must be a single-family dwelling used as your principal residence and it cannot be subject to a subordinate lien.

You may be eligible for a refund of any unearned MI premium if the insurance coverage on your loan is canceled. It depends on the MI product and premium plan selected for your loan, the premium payment status, as well as certain other factors such as the cancellation reason. Talk with your servicer about your specific situation.