How Can I Stop Paying Mortgage Insurance?
- 1). Have your home appraised if you think its value has increased. According to the Federal Reserve Bank of San Francisco, lenders may require proof that the home's value has not declined. Most lenders will require that you submit an official appraisal of your home with any request to cancel private mortgage insurance, to make sure the valuation of your home is accurate.
- 2). Calculate your loan-to-value ratio by dividing the outstanding balance on your mortgage by the value of your home. For example, if you owe $300,000 and your home is worth $375,000, you would divide $300,000 by $375,000 to find your loan-to-value ratio equals 0.8, or 80 percent.
- 3). Pay down your mortgage to the point where you have 78 percent loan-to-value ratio in your home. At this point, your lender is usually required to stop charging you for private mortgage insurance.
- 4). Check your payment history on your mortgage if you hope to cancel your private mortgage insurance when you reach 80 percent equity. To qualify, you must not have been more than 30 days late with your payment in the past 12 months or 60 days late in the past 24 months, according to Lending Tree.
- 5). Contact your lender to request cancellation of private mortgage insurance when you reach 80 percent for your home's loan-to-value ratio. Call first to find out the steps you need to take to cancel private mortgage insurance. Usually, you will have to make the formal request in writing, according to Bankrate, but calling ahead and asking will tell you exactly how you need to proceed.
