Terminating mortgage insurance
If Mortgage Insurance was required for your loan at closing, you might be wondering how long you will need to continue paying this extra expense. The short answer: it depends. Options to remove the mortgage insurance requirement from a loan vary based on factors such as investor, loan type, payment history, property type, age of the loan, and Loan-to-Value (LTV) ratio.
As your mortgage partner for life, we’re here to help you navigate mortgage insurance requirements for your loan. Below, we walk through general eligibility guidelines for cancelling mortgage insurance and, for eligible loans, the process for submitting a request to Customer Care. We are eager to serve you, so please contact us with additional questions.
No, not all loans are eligible. Government-backed loans including FHA, USDA (RHS) and VA loans do not allow mortgage insurance cancellation. It is required for the life of the loan.
If you have a conventional loan, you may be eligible to remove the Private Mortgage Insurance (PMI) requirement if you have been paying your monthly mortgage payments on schedule and your mortgage has reached the required loan balance. Please continue reading to learn about other eligibility requirements that may apply to your conventional loan.
Estimated property values presented on the internet are only estimates and are not accepted as a replacement for an appraisal that is specific to your property. If your loan is less than two years old, it is required that 1) substantial improvements made to the property have increased the property value and 2) an appraisal supports the increase in property value that has resulted from the improvements.
Substantial improvements increase the value of the property and typically include renovations that substantially improve marketability and extend the useful life of the property. Generally, substantial improvements add livable square footage such as a bedroom or bathroom. Improvements that upgrade existing functionality but do not add livable square footage may not be considered substantial improvements—for example, new countertops, tile or carpet, adding solar panels, adding a pool, etc. In addition, the improvements must conform to local zoning and building codes, and the valuation must state the specific nature, extent and cost of the improvements and their effect on current market value.
In accordance with the Homeowners Protection Act, we will cancel PMI after receiving a request from a borrower, and when all cancellation requirements have been met.
As a first step, please contact us to initiate your request. Depending on the owner of your mortgage loan, we may be able to receive your request verbally (by phone). If required by the owner of your loan, we will ask you to send a request to us by email or mail to: PO Box 4638, Englewood, CO 80155. Please include your loan number with your request.
After you submit your request to cancel PMI, we'll send you a packet of information detailing the eligibility criteria, process, and other pertinent information.
Next, here's what will happen:
If your loan is eligible, PMI cancellation may be requested at as soon as your Loan-to-Value (LTV) ratio reaches 80% of the original value, even if your loan is less than two years old. Note, original value means the lesser of the original appraisal value or purchase price.
Depending on the owner of your mortgage loan and applicable state laws, you may be eligible to request PMI cancellation based on the current value of your property. If your mortgage loan qualifies for cancellation based on the current value, the following additional requirements must be met:
You can contact us and we will advise the amount necessary. Typically, the principal must be reduced to 80% of the original value of the property, meaning the sale price when you purchased the property or the appraised value at the time of purchase—whichever is lower.
Typically, principal reduction payments are made via a certified check or wire. If the principal reduction payment is $25,000 or less, we can also accept an electronic payment. If you choose wire funds, please call us to request the banking information for the wire. If you choose to mail a check, we recommend sending with a tracking number. Our mailing address is below:
Attn: Cashiering
10800 E Geddes Ave, Suite 100
Englewood CO 80112
Once your request to cancel PMI is approved, and once we receive your principal reduction payment to lower the LTV to 80% (if applicable), PMI will be removed within five business days.
If we need to order an appraisal, the timeline is dependent on how quickly the appraisal is scheduled and on how quickly we receive the appraisal results. Appraisals may take up to 60 days to be completed. Once we receive the results, the process to review the results and update your account takes five business days.
