Private mortgage insurance (PMI)

Private mortgage insurance (PMI) protects the lender in case the borrower defaults on his or her mortgage loan. Lenders generally require PMI when your down payment on a home is less than 20 percent of the home’s total value.

Shop around

Since PMI coverage is insurance for the lender, not the homeowner, you can’t choose the PMI company. However, you can:

  • Shop around when choosing your mortgage lender.
  • Ask lenders how much they charge for PMI coverage.

PMI and your consumer rights

Under the federal Homeowners Protection Act (HPA), your lender must:

  • Inform you in writing that you have PMI
  • Provide you with an explanation of coverage
  • Tell you when and how you can cancel PMI
  • Let you know annually when you qualify to cancel the coverage.

If you have a history of paying your monthly mortgage bill on time, you can ask to cancel the coverage once your mortgage is less than 80 percent of the home's value or purchase price.

How to file a complaint if your lender doesn’t comply with the HPA

First, find out who regulates your financial institution, then contact the appropriate organization that oversees or regulates it:

Updated 03/27/2014

See also

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