How-to Monday - Mortgage insurance

So much attention has been paid lately to the travails of short-term homeowners that longer-term homeowners probably feel a bit left out. "What do I care?" you grumble. "Why don't you cover something that affects me, dagnabbit?"

All right. How about getting that private mortgage insurance premium off your monthly mortgage bill?

Private mortgage insurance, for those of you short-termers and renters following along, is something homebuyers need if their down payment on a non-government loan is less than 20 percent of the property value. Lenders insist on it to protect them if you go into foreclosure.

It's in an effort to avoid this bill that many buyers opted for two mortgages during the housing boom. Now, an increasing number of new borrowers are finding their way back to PMI -- by choice or default.

The Mortgage Insurance Companies of America, an industry trade group, said the number of new PMI policies increased nearly 40 percent last year.

Not sure whether you're paying for private mortgage insurance? Check your monthly mortgage bill, or look at the "HUD1" form with the paperwork you signed to close the loan. (Or call your lender.)

If you have it, there are three ways you can qualify to cancel: Make enough payments, raise the value of your property with home improvements or (rarer and rarer nowadays) live in an area that's seeing strong gains in sales prices. One or more of those options can get your loan balance down to 80 percent of the value of the home when you got the loan.

There's a checklist about next steps at Mortgage Insurance Companies of America's website, with a more detailed Q&A HERE. Here's what the association says:

--Contact your loan servicer. You should be able to find the contact information on your monthly mortgage bill. Be prepared to provide your Social Security and loan numbers.

--Tell the servicer you'd like to cancel your private mortgage insurance and ask about its requirements to do so. That could mean gathering additional information and paying for an appraisal. (Let the servicer arrange for the appraisal, the insurer association says, so you don't end up on the hook for two bills.)

--After you've jumped through the necessary hoops, send in a written request to cancel.

Katie Monfre, a spokeswoman for Mortgage Guaranty Insurance Corp., says your private mortgage insurance will generally get canceled automatically once your payments equal 22 percent of the original home value. (Federal law requires it for most loans taken out by borrowers after July 29, 1999.)

But now you know how to move things along sooner if you think you qualify -- or get the ball rolling if you suspect it's long overdue.

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