Aurora Mortgage Information

Mortgage Insurance – When Can It Be Cancelled?

If you have a conventional mortgage, and put less than 20% down when you purchased your home (or less than 20% equity when you refinanced your home) your monthly payment includes “mortgage insurance”.

Depending on your interest rate, for a 30-year term mortgage and if you put 5% down payment, it will take approximately 11 years to reach 78% loan to value; with 10% down, it will take about 9 years, and with 15% down, 6 years.

If you have an FHA mortgage, mortgage insurance is automatically included in your monthly payment.

Both types of loans have certain rules where mortgage insurance must be eliminated after a certain period of time—and under certain conditions.

Dropping Conventional Mortgage Insurance Rules:

Automatically Deleted When:

Mortgage balance is reduced to 78% LTV
LTV based upon ORIGINAL VALUE
Based SOLEY on regular amortization (not prepayment of principal)
Mortgage payment must be current

You Request Mortgage Insurance be Deleted

Mortgage Balance is Reduced to 78% LTV
Submit cancellation request in writing
Good payment history
Current on mortgage payments
Appraisal or Certification that property value has not decreased BELOW the original value
No 2nd liens or subordinated loans on property

Dropping FHA Mortgage Insurance Premium Rules:
If your loan closed PRIOR to January 1, 2001, you are NOT eligible for termination of MIP (monthly insurance premium) if closed on January 1, 2001 and after, MIP will be automatically terminated under the following conditions.

More than 15-year term

Must pay for 5 years AND
78% LTV based on original LTV

15-Year Term or less

If original loan amount is 90.01% or more, of the original appraisal value, MIP will be terminated at 78%
5-year minimum payment waived
If original loan amount is 90% or less, of the original appraisal value, NO monthly MIP was charged.

SPECIAL NOTE: Loan-to-Value for purchases based on the lower of the sales price or appraisal value
Loan-to-Value for refinances based on appraisal value
Loan-to-value figured on base loan amount WITHOUT the Upfront Mortgage Insurance for FHA loans.

If you would like for me to determine if you can cancel your mortgage insurance, please call me at GSF Aurora today!