also known as MI and PMI
There are a number of misconceptions. Don't assume that MI payment falls off. Although some are tax deductible (don't forget when you file you taxes!!) no one likes to pay for insurance that doesn't give them anything.
Contact your loan servicer: ask for copy of promissory note if you don't have it
You must request the cancellation of MI in WRITING,
a phone call doesn't legally start the process and some servicers may not give
you correct information this is why you need the note.
A trusted mortgage banker can read the ins and outs of the note for you for free.You don't need an attorney, but make sure you know your rights.
Must have 75% ltv (loan to value) seventy five percent or less first 2-5 years.
Almost all require 2 years to use current appraised value.
Mortgage lenders/investors will typically permit the cancellation of private mortgage insurance (private MI), when you have equity in the home. the Mi was placed to protect the lender in event of default (if
you went into foreclosure the insurance pays the lender somewhere between 18 and 25 percent of loan, depending on what you set up at the start.
you went into foreclosure the insurance pays the lender somewhere between 18 and 25 percent of loan, depending on what you set up at the start.
Because MI insures a lender, the MI company- Names of some not all: MGIC Genworth Mortgage Insurance Corporation MGIC Mortgage Guaranty Insurance Corporation PMI PMI Mortgage Insurance Co PMI Insurance Co and PMI Mortgage Assurance Co UGI United Guaranty Residential Insurance Company and United Guaranty Mortgage Indemnity Company RMIC Republic Mortgage Insurance Company Republic Mortgage Insurance Company of North Carolina Triad Triad Guaranty Insurance Corporation Essent Essent Guaranty
MI company cannot cancel MI coverage. Contact your lender and servicer and have them request cancellation.
If mortgage payments are made on time and you have enough equity in your home, cancelling your MI shouldn't be difficult at all.
You may be able to get a cash refund.
Cancellation based on original value According to the Homeowners Protection Act of 1998 (HPA), ask your lender to cancel mortgage insurance when the mortgage balance reaches 80% of your home’s original value, either because: – You’ve made all of your scheduled payments or – You’ve made extra payments to reduce the principal balance ahead of schedule In addition to your good payment history: –
Your property value must be at least the same as its original value and – There are no subordinate liens on your property If you meet these requirements, your lender must cancel the mortgage insurance on your loan. Cancellation based on current value
You can also ask your lender to cancel mortgage insurance based on your equity due to your home’s value appreciating. (This scenario is not covered under the HPA, and lender/investor requirements may vary.) In addition to your good payment history: – If your mortgage is at least 2 years old but less than 5, you generally need at least 25% equity in your home – If your mortgage is more than 5 years old, you typically need at least 20% equity – Your lender will typically require an appraisal to verify your home’s value Your lender may have additional requirements.
Automatic cancellation: According to HPA, your lender cancels mortgage insurance when: – You reach 22% equity in your home based on the original property value and – Your mortgage payments are current. Note there are lawsuits with homeowners against servicers who did not do this in a timely manner. I don't endorse the trust them scenario.
You may be able to get a cash refund.
Cancellation based on original value According to the Homeowners Protection Act of 1998 (HPA), ask your lender to cancel mortgage insurance when the mortgage balance reaches 80% of your home’s original value, either because: – You’ve made all of your scheduled payments or – You’ve made extra payments to reduce the principal balance ahead of schedule In addition to your good payment history: –
Your property value must be at least the same as its original value and – There are no subordinate liens on your property If you meet these requirements, your lender must cancel the mortgage insurance on your loan. Cancellation based on current value
You can also ask your lender to cancel mortgage insurance based on your equity due to your home’s value appreciating. (This scenario is not covered under the HPA, and lender/investor requirements may vary.) In addition to your good payment history: – If your mortgage is at least 2 years old but less than 5, you generally need at least 25% equity in your home – If your mortgage is more than 5 years old, you typically need at least 20% equity – Your lender will typically require an appraisal to verify your home’s value Your lender may have additional requirements.
Automatic cancellation: According to HPA, your lender cancels mortgage insurance when: – You reach 22% equity in your home based on the original property value and – Your mortgage payments are current. Note there are lawsuits with homeowners against servicers who did not do this in a timely manner. I don't endorse the trust them scenario.
Homeowners Protection Act of 1998 – effective in 1999 – establishes rules for automatic termination and borrower cancellation of private mortgage insurance (PMI) Law applies to loans closed after July 29, 1999 for the purchase, initial construction, or refinance of a single-family home. These protections do not apply to government-insured FHA or VA loans or to loans with lender-paid PMI.
For home mortgages signed on or after July 29, 1999, your PMI must – with certain exceptions – be terminated automatically when you reach 22 percent equity in your home based on the original property value, if your mortgage payments are current.
Your PMI also can be canceled, upon your request – with certain exceptions – when you reach 20 percent equity in your home based on the original property value, if your mortgage payments are current. One exception is if you have not been current on your payments within the year prior to the time for termination or cancellation. Another is if you have other liens on your property. A third is the property cannot have declined in value from the original value. For these loans, your PMI may continue. .
If your home loan opened before July 29, 1999, (frankly few are that old, most were sold or paid) ask to have the P M I or MI canceled once you exceed 20 percent equity in your home. No federal law requires your lender or mortgage servicer to cancel the insurance, but write the letter anyways. The savings could be great
Caroline Gerardo
NMLS 324982
949- 784- 9699
Caroline Gerardo
NMLS 324982
949- 784- 9699