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Resources > Glossary > Private Mortgage Insurance

Glossary of Notary Public, Mortgage, Signing Agent, and Loan Signing Terms.

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Private Mortgage Insurance

Function: noun

Also known as PMI.

Nongovernment provided insurance that protects lenders against loss if a borrower defaults. Fannie Mae generally requires private mortgage insurance for loans with loan-to-value (LTV) percentages greater than 80%. There are certain disclosures regarding PMI that must be given to the borrower. You can cancel your PMI once your mortgage is paid the point where you owe less than 80% of the purchase price or appraised value. Under HPA, mortgage lenders or servicers must automatically cancel PMI coverage on most loans, once the mortgage is paid down to 78 percent of the value if you are current on your loan. For high risk loans, mortgage lenders or servicers are required to automatically cancel PMI coverage once the borrower pays the mortgage down to 77 percent of the original value of the property, provided they are current on your loan. The following disclosures must be provided to the borrower: The right to request cancellation of PMI and the date on which this request may be made. The requirement that PMI be automatically terminated and the date on which this will occur. Any exemptions to the right to cancellation or automatic termination. A written initial amortization schedule (fixed-rate loans only).

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Mortgage Insurance