How do I cancel my Mortgage Insurance (MI)??

I’m getting this question from many home-owners recently  looking to get rid of their "expensive monthly MI" along with current purchasers who are comparing our special “no monthly MI” to the standard options they hear from other banks and mortgage companies.

 The HOMEOWNERS PROTECTION ACT has 2 main points that homeowners who have loans with “monthly MI” should know:

1.      Borrower paid MI must be cancelled automatically when the mortgage amortizes to 78% of the original property value.

2.      Borrower paid MI may be cancelled at the borrowers request if:

• The mortgage balance is 80% of the original property value
• Payments are current
• No other liens exist
• The investor is satisfied the property value has not declined

More so… other important points to consider for option #2 is that the INVESTOR/SERVICER is the one who sets the cancellation requirements… not the MI provider.  They may consider:

1.      Mortgage paid down to less than 80% LTV

2.      Structural improvements to increase the property value

3.      Home values in the neighborhood appreciating significantly

4.      A BPO, CMA (Realtor opinions) or a full appraisal may be required by the borrower

Other questions and answers:

What should I do to find out if I have the ability to cancel my MI

Gather some basic information for your loan servicer including your name, social security number, property address, loan number and if you can find the HUD/Settlement Statement from your closing.

Next you should contact your servicer to request information on their specific cancellation requirements which may include supplying additional information on the home, the loan and possibly having a BPO, a CMA or a full appraisal completed.

Once this is complete… send a formal request in writing for the cancellation of your MI.

How long do I HAVE to have MI on my loan?

This is dependent on the servicing lender on your loan but typically a minimum of 2 years of payments is required to get to any acceptable LTV level.

How long would it take to get the automatic cancellation point?

I wish more people would ask this question.  Depending on the rate you have and the term you have on your mortgage its simple math.  Ok… not really simple but it is just math.  I have a chart to review (ask and you shall receive).  One example is: a borrower who puts 5% down on a 30 year term and gets an interest rate of 5% will take 9.5 years before the “automatic termination” will apply.

Can I get a refund?

You may be eligible for a refund of your mortgage insurance premium when the MI policy is cancelled.  It depends on the type of MI product you have plus a few other criteria.  

Where can I get more info on cancellation?

The Mortgage Insurance Companies of America’s website provides additional information, including a cancellation calculator and sample letters to submit to the mortgage servicer. Check it out by visiting www.privatemi.com

Conclusion:

You need to know this information to make an educated decision on how to get RID OF the "expensive monthly MI" you're paying currently OR to learn what type of MI to consider at point of loan origination.   You can see that the ability to get rid of “borrower paid MI” quickly… is completely up to the servicer and variables that are outside of your control (appreciation and the opinion of someone else’s BPO, CMA or appraisal)

Any questions please contact me and I can educate you on how to avoid paying "monthly MI" in the first place... then this post is just to give me something to BLOG about for the folks who got that force-placed into the "expensive MI".

Steven Brand – nmls# 261849

Mortgage Consultant & Certified Military Housing Specialist

Mobile: 612.386.5306

e-mail: Steve@iLoanHomeMortgage.com