Question

What happens if a borrower accidentally pays for PMI (Private Mortgage Insurance) after it has been cancelled or terminated?

A) The excess payment is refunded to the borrower.
B) The payment is credited toward the borrower's future mortgage payments.
C) The lender retains the excess payment as a fee.
D) The borrower is not entitled to any refund or credit.

Answer 1

If a borrower accidentally pays for PMI after it has been cancelled, the excess payment is typically refunded to the borrower.

Step-by-step explanation:

If a borrower accidentally pays for PMI (Private Mortgage Insurance) after it has been cancelled or terminated, the excess payment is typically refunded to the borrower. PMI is usually required when the borrower's down payment is less than 20% of the home's value. Once the borrower's loan-to-value ratio reaches 80% or less, the borrower may request the cancellation of PMI. If the borrower accidentally makes a payment after cancellation, it is common practice for the excess payment to be returned to the borrower.