SunTrust Mortgage, Inc. - Mortgage Insurance and Private Mortgage Insurance


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mortgage insurance and private mortgage insurance

What is mortgage insurance or private mortgage insurance?
Mortgage Insurance protects a lender if a borrower defaults on a loan. Mortgage insurance is placed on the loan when the borrower does not have a sufficient amount of equity or downpayment. For a conventional loan, private mortgage insurance is typically required if you are borrowing more than 80% of the purchase price. Therefore, private mortgage insurance makes it possible for home buyers to purchase a home with only a 5% or less downpayment. For FHA loans, mortgage insurance is required on all loans, regardless of the amount of the downpayment. The private mortgage insurance company or the FHA shares the risk of foreclosure with the lender, thus, the lender is willing to lend you money with a significantly smaller down payment.

Mortgage insurance is unique compared to other types of property or life insurance purchased by a home buyer. It should not be confused with credit life insurance, which is an insurance policy that repays an outstanding mortgage debt upon the death of the borrower who holds the insurance policy. Mortgage insurance is paid for by the borrower, but only benefits the lender; borrowers cannot make claims against the policy.

The Good Faith Estimate of Closing Costs provides the estimated upfront premium, if any, and monthly cost for the MI coverage, if applicable.

How can I cancel MI?
Mortgage Insurance on FHA loans cannot be canceled, until the loan is paid in full.

Private mortgage insurance (PMI) may be cancelled under certain requirements as determined by the investor of your mortgage loan. Although the following are not all of the conditions for the cancellation of private mortgage insurance, they are the most common.

A minimum number of consecutive monthly payments. (This may vary from as few as 12 months to as long as 7 years depending on the type of loan.)
A good payment record with no delinquencies within the 12 months preceding your request for cancellation of the private mortgage insurance.
A new appraisal from a certified FNMA/FHLMC appraiser, certified pursuant to state and/or local requirements. (The new appraisal is paid for by the borrower).
Loan balance below 75% to 80% of the property value if the property is owner occupied; or below 60% to 65% of the property value if non-owner occupied.
Your request for cancellation must be in writing.

If you feel you have satisfied the cancellation conditions and are eligible to have your PMI cancelled, please write or e-mail to our Customer Service Department.

When we receive your request, we will review your account based on the specific guidelines set by the investor on your loan. Not all investors will permit the cancellation of PMI. The investors that do consider the cancellation of PMI have specific guidelines; however, the guidelines may change at any time.

For further information, please contact our Customer Service
Department at 1-800-634-7928 or send us an e-mail.

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