How to remove Mortgage Insurance
Now is a good time to request removal of mortgage insurance
Utah home values have risen for 5 straight years. History tells us that the next two years are going to be the cool down period of this real estate cycle. If you purchased or refinanced a home in the last decade and were saddled with mortgage loan insurance, this year is a good time to request that this insurance be removed.
A mortgage insurance company insures mortgages so that lenders will be encouraged to make more mortgages available to a wider array of people. Despite the fact that you’re paying this premium the mortgage insurance agreement is between the insurance company and the mortgage company, so you must contact your mortgage company and ask them what they require to cancel the insurance.
If you’re mortgage loan is an FHA loan closed prior to June 3, 2013 you may be able to remove the monthly premium. If your mortgage loan was streamlined or closed after June 3, 2013 you CANNOT cancel the premium.
The first step, especially if you’re unsure of the exact closing date or type of mortgage you have, is to contact customer service in writing by mailing a letter to the general correspondence address. It would be wise to call customer service and ask for the mailing address to request the removal of mortgage insurance. Your letter will simply ask that they mail you instructions to consider removing the mortgage insurance. The letter does two things, 1) it flags the account that you desire to remove the insurance and, 2) it ensures your effort will go smoothly if you comply with the servicers policies and procedures which likely comply with the Consumer Financial Protection Bureau regulations.
Here’s what you can expect.
1) You will have to pay a deposit that goes toward an appraisal that the mortgage company chooses – you should expect to pay up to $500 non-refundable
2) You may be denied for one of three reasons: A) you don’t have an excellent payment history, B) there is not currently enough equity in the property, and C) The loan is not old enough (seasoned)
3) The process may take up to three months.
Because the fees are non-refundable consider call Darrell Catmull of Destiny Real Estate to run a simple search that complies with appraisal standards. If Darrell finds three comparable properties that indicate you might have 22% equity send that request letter with confidence.
Darrell, is available to discuss removing mortgage insurance in detail, just call
before 7pm Monday through Friday.