I repeatedly receive telephone calls from consumers looking to refinance their conventional mortgage simply to drop their expensive monthly mortgage insurance. A refinance is not necessary to accomplish this! A refinance is a costly way to accomplish something than can historically be done via an appraisal. But wait, with recent changes implemented by Fannie Mae, the process actually became much simpler.
Should a consumer believe that recent property appreciation has them under the required threshold, Fannie Mae will now utilize a BPO (Broker Price Opinion) to identify current value at a cost to the consumer of roughly $150 to $325.
Be aware that should you have added a 2nd mortgage, it will be factored into the loan to value (LTV) and will impact the timing of when you’d be eligible to remove your mortgage insurance.
In addition, your loan Servicer (company you make your mortgage payment to) will verify that the Borrower has an acceptable payment record.
- Mortgage must be current at the time that the mortgage insurance termination is made
- There have been no 30-day or greater past due notices in the last 12 months and
- There have been no 60-day or greater past due notices in the last 24 months
The loan to value for removing varies depending on whether the property is owner occupied, a second home or an investment property as well as the length of time they’ve had that specific mortgage.
- Owner occupied or 2nd home 75% LTV if the mortgage has been in place between 2-5 years. NOTE: If the borrower can document property improvements made that increased the value, then the 2-year minimum seasoning requirement may be waived and the removal can be based on an 80% LTV.
- Owner occupied or 2nd home 80% LTV if the mortgage has been in place greater than 5-years
- 1-4 unit non-owner occupied properties require 70% LTV or less regardless of the length of time that the mortgage has been in place.
If you have questions, give me a call or check with your current Servicer to confirm what type of loan you have and what your options may be right now.