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I just learned that MPI payments are supposed to be automatically cancelled when the loan principal reaches 78%. On my loan this happened in January 2020. I have the appraisal from the refinance and I have never been late. Obviously I'm going to send a letter telling them to cancel the payments, but should I also demand they refund the previous 29 payments?

More Info from comments:

It's an FHA loan. I did the refinance in 2018. I wasn't aware there were two types of insurance. On the statement it just says "mortgage insurance". In the original contract it says the insurance would be for years 1 through 11 and then would stop. Lemme contact them and see what they say.

They said: "I'm showing that your loan is a FHA loan and they have their own guidelines for waiver of PMI. Your loan closed in August 29, 2018, so you are required to have PMI 11 years. Your PMI is scheduled to automatically terminate in September of 2029."

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    PMI (private mortgage insurance) protects the lender and should be automatically cancelled at 78% LTV. MPI (mortgage protection insurance) protects your family, and can be held as long as you want it. Are you referring to PMI or MPI? The latter should not be automatically cancelled at any LTV. May 3 at 16:09
  • What type of loan do you have (FHA, VA, conventional ?) when did you do the refinance? May 3 at 16:22
  • It's an FHA loan. I did the refinance in 2018. I wasn't aware there were two types of insurance. On the statement it just says "mortgage insurance". In the original contract it says the insurance would be for years 1 through 11 and then would stop. Lemme contact them and see what they say.
    – Brad Dean
    May 3 at 16:28
  • Okay, after talking with them they confirmed it is PMI. They said: "I'm showing that your loan is a FHA loan and they have their own guidelines for waiver of PMI. Your loan closed in August 29, 2018, so you are required to have PMI 11 years. Your PMI is scheduled to automatically terminate in September of 2029."
    – Brad Dean
    May 3 at 16:46
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    @BradDean Sounds like it's actually neither PMI nor MPI, but MIP (mortgage insurance premium). MIP does have different rules for FHA loans, you'll likely need a conventional loan refinance to stop paying it before the 11 years is up. May 3 at 18:20

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When dealing with mortgages in the US, there are three different three-letter acronyms that involve the letters M, I, and P and that relate to insurance. These are very easy to confuse and appear to be the source of your issues.

MPI, the acronym in your question, refers to mortgage protection insurance. Mortgage protection insurance is a special form of life insurance that pays off your mortgage in the event that you die. The vast majority of people are better off getting a term life policy instead that is large enough to allow your survivors to pay off the mortgage or to do whatever else makes financial sense to them-- continuing to just make payments, paying off the mortgage entirely, paying it off partially, selling and downsizing, etc. MPI might make sense if you worry that your survivors might not handle a large insurance payout well. MPI won't ever be cancelled automatically but is an optional product that you can (and probably should) decline.

PMI is private mortgage insurance. This pays the holder of your mortgage back if you default. If you have a conventional mortgage, you'll be required to have PMI if you have less than 20% equity. PMI will be cancelled automatically when your loan-to-value goes below 78%. Of the three-letter mortgage insurance acronyms, this is the most common one for people to discuss.

MIP is mortgage insurance premium and appears to be the type of insurance you actually have. MIP insures the holder of your FHA mortgage in case you default. If you have a FHA loan, you'll have upfront MIP (MIP paid when you close the loan) and annual MIP though most lenders will break your annual MIP payment into monthly payments. The amount of your annual MIP and how long you'll have to pay it will depend on the term of the loan, how much you are putting down, and how much you are borrowing. If you put at least 10% down on a 30-year mortgage, you'd have to pay MIP for 11 years which seems to square with what your servicer is telling you. You could refinance into a conventional loan rather than an FHA loan to eliminate MIP (conventional loans generally have stricter qualification requirements though).

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