The NMWelcomeHome Team Blog

We are asked how to drop the Mortgage Insurance on your loan. Mortgage Insurance also known as MI or PMI (Private Mortgage Insurance) is part of your monthly mortgage payment. Mortgage Insurance is required when putting less than 20% down payment on a home. It can be costly and will add $100 plus to your loan payment (depends on loan amount). Mortgage Insurance is to protect the lender in case you default on your home loan.

Below are explanations on how to or when MI will be removed from your monthly mortgage payment.

Dropping Conventional Mortgage Insurance Rules

• Automatic Termination
  • Fixed Rate & Adjustable - Removed when reduced to 78% LTV
    • LTV based upon ORIGINAL VALUE
    • Based SOLEY on regular amortization (not prepayment of principal)

Additional Requirement:

• Mortgage payment must be current

• Borrower Requests Termination
• Fixed & Adjustable - Removed when reduced to 78% LTV

 Additional Requirements:

• Submit cancellation request in writing
• Good payment history
• Current on mortgage payments
• Appraisal or Certification that property value has not decreased BELOW the original value
• No 2nd liens or subordinated loans on property

Dropping FHA Mortgage Insurance Premium Rules

Loans closed PRIOR to January 1, 2001 are NOT eligible for termination of MIP (monthly insurance premium) if closed on January 1, 2001 and after, MIP will be automatically terminated under the following conditions.

• More than 15-year term
  • Must pay for 5 years AND
  • 78% LTV based on original LTV
  • • 15-Year Term or less
    • If original loan amount is 78.01% or more, of the original appraisal value, MIP will be terminated at 78%
    • 5-year minimum payment waived
    • If original loan amount is 78% or less, of the original appraisal value, NO monthly MIP will be charged.