## Can Mortgage Insurance Be Canceled?
When you take out a mortgage, you may be required to pay mortgage insurance if your down payment is less than 20% of the home’s purchase price. Mortgage insurance protects the lender in the event that you default on your loan.
There are two main types of mortgage insurance: private mortgage insurance (PMI) and Federal Housing Administration (FHA) mortgage insurance. PMI is typically required by private lenders, while FHA mortgage insurance is required by the FHA.
PMI is typically more expensive than FHA mortgage insurance, but it can be canceled once you have reached a certain level of equity in your home. FHA mortgage insurance is typically cheaper than PMI, but it cannot be canceled.
## Can PMI Be Canceled?
Yes, PMI can be canceled once you have reached 20% equity in your home. You can request to have PMI canceled by sending a letter to your lender. The lender will then review your request and determine if you qualify for PMI cancellation.
To qualify for PMI cancellation, you must have a good payment history and a current appraisal that shows that your home has reached 20% equity. You may also be required to pay a cancellation fee.
## Can FHA Mortgage Insurance Be Canceled?
No, FHA mortgage insurance cannot be canceled. FHA mortgage insurance is required for the life of the loan, regardless of how much equity you have in your home.
## Why Would You Want to Cancel PMI or FHA Mortgage Insurance?
There are several reasons why you might want to cancel PMI or FHA mortgage insurance:
* **To save money.** PMI and FHA mortgage insurance can add hundreds of dollars to your monthly mortgage payment. Canceling PMI or FHA mortgage insurance can save you a significant amount of money over the life of your loan.
* **To increase your home equity.** When you pay PMI or FHA mortgage insurance, you are essentially paying for insurance that benefits the lender, not you. Canceling PMI or FHA mortgage insurance can help you increase your home equity faster.
* **To get a lower interest rate.** When you cancel PMI or FHA mortgage insurance, your lender may be willing to give you a lower interest rate on your loan. This can save you even more money over the life of your loan.
## How to Cancel PMI or FHA Mortgage Insurance
To cancel PMI or FHA mortgage insurance, you will need to send a letter to your lender. The letter should include the following information:
* Your name and address
* Your loan account number
* The date
* A statement that you are requesting to cancel PMI or FHA mortgage insurance
* The reason why you are requesting to cancel PMI or FHA mortgage insurance
* A copy of your current appraisal (if you are requesting to cancel PMI)
Your lender will then review your request and determine if you qualify for PMI or FHA mortgage insurance cancellation. If you qualify, your lender will send you a confirmation letter and cancel your PMI or FHA mortgage insurance.
## Conclusion
PMI and FHA mortgage insurance can be a significant expense. If you have reached 20% equity in your home, you may want to consider canceling PMI or FHA mortgage insurance to save money and increase your home equity.