Cancellation of Private Mortgage Insurance: Federal Law May Save You Hundreds of Dollars Each Year

Private Mortgage Insurance, PMI, refers to insurance provided by non-government insurers that protects lenders against loss if a borrower defaults and usually comes into force when homebuyers make a down payment less than 20% of the home's purchase price. According to the Federal Trade Commission, The Homeowners Protection Act of 1998 establishes rules for automatic termination and borrower cancellation of PMI on home mortgages. The article highlights details wherein homebuyers can avail of benefits on home mortgages signed on or after July 29, 1999 for the purchase, initial construction, or refinance of a single-family home. [ Federal Trade Commission, 2006]