Do you currently have a monthly Mortgage Insurance (MI) payment, but would like to know when you can request for it to be canceled?  Or how to go about requesting this change in your monthly mortgage payment?

Well, our friends at MGIC put together this information for us.  This may be their process, but it should be similar with other MI Companies.

Here's their suggestions regarding when it's applicable and advice how to go about requesting the cancellation:

Cancellation based on original value

According to the Homeowners Protection Act of 1998 (HPA), you can ask your lender to cancel mortgage insurance when your 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 request must be in writing
-Your property value must be at least the same as its orginal 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% 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 -No Asking Required!

Under the HPA, your lender must cancel mortgage insurance on your loan -with certain exceptions -when:

-You reach 22% equity in your home based on the original property value and
-Your mortgage payments are current

For mor information, contact your lender.

American Pacific Mortgage

Mike Bjork
Sr. Mortgage Planner
Corp NMLS #1850 | Originator NMLS #275652

Phone: 310.694.3544
Cell: 310.923.1884
Fax: 800.986.3155

100 Spectrum Center Drive, Suite 460 Irvine California, 92618


Licensed by the Department of Business Oversight under the California Residential Mortgage Lending Act

© 2015 American Pacific Mortgage Corporation. All information contained herein is for informational purposes only and, while every effort has been made to insure accuracy, no guarantee is expressed or implied. Any programs shown do not demonstrate all options or pricing structures. Rates, terms, programs and underwriting policies subject to change without notice. This is not an offer to extend credit or a commitment to lend. All loans subject to underwriting approval. Some products may not be available in all states and restrictions apply. Equal Housing Opportunity.

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