In addition, rates for adjustable rate mortgages are higher than for fixed-rate mortgages. Many state legislators and U.S. congressmen agree that pro-consumer changes are needed. Bills are pending in both the U.S. House and the Senate that would require mortgage lenders to disclose when PMI is no longer needed, and provide a mechanism for homeowners to easily cancel their PMI policies. Things are moving fairly rapidly now. Currently, the House and Senate are working to resolve the differences between the two bills, according to Kapen.
Every lender has slightly different rules regarding cancellation.
Some lenders require a five-year wait before PMI can be eliminated. A minimum of 12 or 24 consecutive monthly payments. A good payment record with no delinquencies. Borrowers with adjustable rate mortgages may be required to make a specific number of payments since their last payment increase. The key for most home buyers is reducing the loan value to less than the 75 percent to 80 percent threshold, since most of each monthly payment during the first few years of the loan is devoted to interest.