DO YOU HAVE A FHA LOAN WITH PMI INSURANCE? YOU DO NOT HAVE TO PAY PMI FOR THE LIFE OF YOUR LOAN FHA mortgage insurance is never permanent. It can either go away on its own, or you can refinance it away. For homeowners whose FHA mortgage pre-dates June 3, 2013, MIP goes away when certain conditions are met : 30-year loan term : Annual MIP is automatically canceled once the loan reaches 78% loan-to-value and annual MIP has been paid for at least 60 months.15-year loan term : Annual MIP is automatically canceled once the loan reaches 78% loan-to-value. There is no requirement for MIP to be paid for at least 60 months. Homeowners should note that LTV calculations are based on the FHAs last known value of the home -- not its current appraised value. For many people, the last known value is the value of the home at the date of purchase; the last time the home was FHA-appraised. For some quick math, a 30-year FHA mortgage with 3.5 percent downpayment will reach 78% LTV in roughly 11 years. A 15-year fixed with 3.5 percent down would reach 78% LTV in just over two years. However, you can end your MIP sooner. Home values have been rising since 2011 and its given FHA-backed homeowners a veritable home equity boost. Rather than using the FHA Streamline Refinance which required todays new, higher premiums, savvy homeowners have refinanced out from the FHA. With as little as 5% equity, homeowners are finding it cheaper to refinance into a conventional loan from Fannie Mae or Freddie Mac. Mortgage insurance rates are lower via Fannie and Freddie, and insurance payment cancel once the home gets 20% equity. The math gets even better as your home equity levels increase. With an FHA loan, MIP rates are flat. Via Fannie Mae or Freddie Mac, though, rates decrease along with your LTV. Unless your loan is grandfathered, ditching the FHA for conventional can be the best way to lower your payment and cancel your MIP. themortgagereports
Posted on: Fri, 17 Jan 2014 05:39:17 +0000
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