Mortgage insurance is required on loans that are 80% or more of the value of the home, and protects the lender if the home-buyer defaults on the loan. It can be cancelled within the first few years.
We just got a letter notifying us that our mortgage insurance is eligible for cancellation, but they're asking for a $97 processing fee, which will acquire late fees if not sent by a given date. Seriously? I can't just call my lender and say, "Cancel my mortgage insurance?"
It's still worth it, if I'm paying $84 a month on mortgage insurance that benefits my lender, not me, but I just think that "processing fee" sounds suspect. Anyone done this?
Speak with your lender, they will know by looking at your Mortgage Balance and the value of your home they should be able to help you cancel without having to pay a fee. If your loan is an FHA loan then they will automatically cancel the MIP when the loan is less than 80% of the home value. I have never heard of anyone having to pay a fee to cancel. That doesn't sound right.
Answer by emerald53197 at 11:38 PM on Dec. 1, 2010
Sounds like a scam. It should "go away" automatically when you hit the %. Call your lender and ask. Cancel isn't the right word because you are actually failing to renew or letting it expire or something. I can see where there might be a fee if an appraisal is required if it is truly based on the value of the home rather than the price you paid however many years ago, but the late fee screams scam to me! If the letter is from your lender call a government agency and ask if it is legal. Basically they are supposed to discontinue Private Mortgage Insurance as soon as you get to the %. I got a prorated refund on mine. It is worth a few phone calls.
Answer by LoveMyDog at 7:55 AM on Dec. 2, 2010
Answer by Kari126 at 8:01 AM on Dec. 2, 2010