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Mortgage insurance (often referred to as PMI or MIP) is included in your mortgage payment does not pay off your mortgage in the event of death. This is a misconception among some homeowners. 

Mortgage insurance protects or limits the loss to lenders in the unlikely event you default on your mortgage, and the home was foreclosed. 

Who has mortgage insurance?

If you have a conventional loan, and you put less than twenty 20 percent down payment, you likely have mortgage insurance premium that is paid monthly along with mortgage payment. 

If you have an FHA loan, regardless of the downpayment you have mortgage insurance that is included as part of your mortgage payment. 

If you have a VA loan, you may have paid a one-time VA funding fee at closing or may have financed the fee in your mortgage. VA does not require mortgage insurance. 

Does Mortgage insurance go away? 

For conventional loans, the mortgage insurance can be removed when you have paid twenty percent of the purchase price of the home. Some lenders will remove the mortgage insurance premium after a year of on time payments, and the property has at least 20 percent equity. The lender will likely request an appraisal or broker price opinion to determine the value of the property. 

For FHA loans, the mortgage insurance can be removed only if your initial down payment was ten percent or more at the time of purchase, then it would fall off after 11 years. 

In conclusion, if you have mortgage insurance, be aware because it won’t necessarily disappear without your action. 

Leighton Grant 

Innovative Mortgage 

NMLS 2040998