Whether you’re a first-time homebuyer or looking to refinance, understanding Private Mortgage Insurance (PMI) is crucial for making informed decisions about your mortgage. Let’s demystify PMI and review frequently asked questions explaining what it is, why it’s necessary, and how it impacts your monthly payments.
1. What is Private Mortgage Insurance (PMI)?
PMI is insurance that protects lenders against financial loss if a borrower defaults on their mortgage loan. The cost of PMI is added to your monthly mortgage payments.
2. When can I request to cancel PMI?
You can request to cancel PMI when the principal balance of your loan reaches 80% of the original value of the property. To do this, you must:
- Submit a written request to loan_servicing@chelseagroton.com by email or 904 Poquonnock Road, Groton, CT 06340 by mail.
- Have a good payment history. (See question 3)
- Be current on your loan payments.
- Provide evidence that the property value has not declined and certification that there are no subordinate liens on the property.
3. What is considered a “good payment history”?
A good payment history means:
- No payments 60 days or more past due within two years.
- No payments 30 days or more past due within one year of the cancellation date or the date you submit a request for cancellation.
4. What is the “original value” of the property?
The original value is the lesser of:
- The contract sales price of the property when you bought it.
- The appraised value of the property at the time your loan was closed. For refinanced loans, it is the appraised value relied on by the lender to approve the loan.
5. When will PMI automatically terminate?
PMI will automatically terminate when the principal balance of your loan reaches 78% of the original value of the property, provided you are current on your loan payments. It will also terminate at the midpoint of the loan amortization period if you are current on payments.
6. What happens if I am not current on my loan payments when PMI is scheduled to terminate?
If you are not current on your loan payments when PMI is scheduled to terminate, it will automatically terminate on the first day of the month immediately following the date when you become current on your loan payments.
7. How can I get more information about PMI cancellation?
For further information or to determine if you can cancel PMI, you can contact Chelsea Groton Bank at:
- Address: 904 Poquonnock Road, Groton, CT 06340
- Phone: (860) 448-4200 (Ask for the Loan Servicing Department)
If you have any other questions or need further assistance, please contact the Bank’s Customer Care team at 860-448-4200 or through Chelsea Live video banking.
