Like every mortgage lender, Suntrust Mortgage and removing PMI involves guidelines to follow. As the borrower, you should know and understand these guidelines and stay up-to-date with any changes that may affect your chances of canceling PMI.
PMI
To better understand why you pay PMI, it's important to understand what it is. Lenders accept a certain amount of risk when they loan money for mortgages. PMI is mortgage insurance that the borrower purchases when required by the lender. This insurance protects the lender against loss if you should default on your loan. PMI stands for "Private Mortgage Insurance" and is paid on mortgage loans with a loan-to-value that is greater than 80 per cent. After you gain 20 per cent of your home's value in equity you can contact Suntrust Mortgage and removing PMI may be a consideration.
Suntrust Mortgage and Removing PMI
Suntrust Mortgage has guidelines in place to protect their interest and yours. If you have a mortgage with Suntrust and are interested in removing the cost of PMI you will have to make the request. Before you do, familiarize yourself with the guidelines that govern the removal of PMI. Here are the main requirements which are decided upon by the investor of your mortgage loan.
Consecutive Monthly Payments
Depending on the type of loan you have, investors require a minimum number of consecutive monthly payments. This number may fall between 12 months and 7 years.
No Delinquencies
If you are ready to request the removal of PMI a good payment record with your mortgage loan is a necessity. This means no delinquent payments in the 12 months previous to your request for PMI cancellation.
Certified Appraisal
If you want to cancel your PMI, Suntrust Mortgage will require a new certified appraisal and you as the borrower will be responsible for paying for the appraisal. Certification is pursuant to state and local requirements.
Loan Balance
Suntrust Mortgage and PMI removal considerations are also determined by the loan balance. This is not as simple as one might think, but depends on whether the home is owner occupied or an investment property. If the home is owner occupied, then the loan balance needs to be below 75-80 percent of the property's value. If the home is considered an investment property the loan balance must fall below 60-65 per cent of the property's value.
Written Request
When you are ready to remove PMI, make your request in writing telling them that you want to cancel it. This request can be emailed to their Customer Service Department. After they receive your written request, your account will be reviewed.
No Guarantee
Even when you follow all of the above guidelines not every investor will allow the cancellation of PMI. The investors who do permit PMI to be canceled follow specific guidelines and these guidelines do change from time to time.
By law, mortgage lenders must inform you at closing how many years it will be until your loan is paid down enough to cancel PMI. Pay close attention to these details and make note of where they are found within your agreement. It's important that you understand your mortgage. Mortgage servicers are also required to provide borrowers with an annual statement that provides contact information of who to call for information about the cancellation of PMI.
If you are a high-risk borrower your request to cancel PMI may be denied until you lower your balance to 50 per cent of your home's value. If you've missed house payments you will be considered high risk and that will go against you when asking to cancel your PMI.
Tips to Raise Your Chances of Canceling PMI
Since the cancellation of PMI rests primarily on building up home equity of 20 per cent or more there are ways to speed up the amount of equity you have in your home. Here are a few:
- Make improvements in your home that raise the value, and then have the lender recalculate the loan to value ratio.
- Prepay - Even if you can pay an extra $50-$100 a month it can make a big difference in your loan balance over time because this amount is applied toward the principal.
- Appraisal - Ask your lender if they will consider a new appraisal instead of the original sales price when determining if you meet the 20 per cent equity threshold. If so, hire a certified appraiser for the job.
