How can you prevent a lapse in mortgage insurance when refinancing?


To prevent your mortgage insurance from lapsing when you refinance your mortgage, you should terminate the existing policy and apply for new coverage.

Mortgage insurance for a refinanced mortgage would have a lower premium rate, as this is given a lesser reissue rate. This is when your existing policy has been effective for less than five years.

Here's what you can do to ensure your mortgage insurance doesn't lapse:

  • Contact a service representative from your insurance company and ask that they terminate the existing policy. You may have to pay some cancellation fees, but most insurance companies will waive this if you buy the second policy from them.
  • Pay for the new mortgage insurance policy, even from the start of the coverage. Make sure that you pay any remaining premiums regularly.
  • Enhance your credit rating. Make sure you stay current with your credit cards and any lines of credit and that bills and debts are paid on time. This will help you save on premiums for refinancing, as your credit rating will affect your premium fees.
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