Can I cancel PMI on FHA loan?

One has to choose a private mortgage insurance policy when he makes a down payment lower than 20% of the purchase price or appraised property value, whichever is lower. In case of an FHA loan, one can cancel PMI only when he has been paying premiums for the past 5 years.

Hi Guest,

Welcome to our forums.

The cancellation of the FHA monthly mortgage insurance premium (MIP) is based on factors like the loan term, loan-to-value at loan origination and the regulations when the loan is closed.

In general, the loans closed prior to January1, 2001 will not be eligible for cancellation of the MIP. However loans closed on or after January1, 2001 can be cancelled under certain conditions.

• For loans with terms exceeding 15 years
  
  The borrower must have paid 78% of the debt and the premiums should have been paid for at least 5 years. In any case, the borrower has to fulfill the 5 year term payment even though he has paid off 78% of the total debt.
  
  
• For loans with term 15 years or below:
  
  In this case, if the borrower has taken loan against 90% of the property value or greater, then the MIP will be terminated only when the former is able to repay 78% of the debt. This however, does not include the time period for which the borrower has paid the MIP.
  
  
• For loans against 89.99% of property-value and less:
  Borrowers under this category will not be charged MIP.

Although the MIP can be cancelled, the FHA insurance will remain in force for the entire loan term. The provision for cancellation only applies to loans on which borrowers have paid an upfront MIP at closing.

Thanks,

Caron.

I have an FHA 30 loan since 2002. I'm trying to find out if I can cancel the Mortgage Insurance on my loan. My lender said that I have to continue paying it throughout the remainder of the loan. I read above where it mentions that, although the MIP can be cancelled, the FHA insurance will remain in force for the entire loan term. What is the difference between the two.

A Mortgage Insurance Premium is required for an FHA-backed loan, while a Private Mortgage Insurance is needed for conventional loans. Both the insurances are meant for the protection of the lender's interest against any losses in case of a default by the borrower. MIP can be cancelled if the LTV ratio reduces to 78% and if you have made the insurance payments for at least 5 years.

Hi

In the past the mortgagor had to bear the burden of MIP throughout the term of the FHA loans. But the rule had been changed and now the MIP can be cancelled on all FHA loans closed on or after January 1, 2001 under the following conditions:
1. If the term of the loan is more than 15 years, the MIP can be cancelled when the LTV reduces to 78%. In this case the mortgagor needs to have paid the insurance premium for at least the past 5 years.
2. If the term is less than 5 years, the MIP will be cancelled when the LTV reaches 78%. The difference in this case is that, the mortgagor can ask the lender to cancel the MIP even if he/she has not paid the premium for 5 years.

What if home equity is reached in a home purely by its increasing value? My home is worth nearly double what I purchased it at 8 1/2 years ago, but I'm only at an 82% LTV from the original appraisal on an FHA loan. Can't I submit a new appraisal report, such as URAR- 1004 uniform residential appraisal report for single family homes to compel the lender to drop my MIP since I would effectively now have about 50% equity?

You have to call the lender and ask if you can cancel the MIP.

If they say no, you can not.

If they say yes, but, need an appraisal to verify the present value, then you get the appraisal.

Only other way is to refinance and get rid of the FHA mortgage. Depending upon your rate now, that may or may not make sense.

In January i reached the goal of 78% LTV and asked the lender to remove MIP. Lender did remove MIP but I just had the escrow analasis done and the MIP was re-applied? Can they do this or did the right hand not talk to the left? I am now at 73% LTV.

Talonsx2, you most definitely need to get the two hands on the phone with you and discuss this with them. It seems a travesty that the escrow analysis has reinstated the MIP when you ought to be delivered from it.

Yes, definitely get in touch with your servicer and request better service and compensation of any excess funds paid, if that occurred.

Me again....compensation or at least a transfer from escrow directly to your principal balance so that you get the benefit in some way.

This is an FHA mortgage because you have MIP.
Is it a 30 year FHA mortgage?
What date did the mortgage start?
In addition to reaching 78%, you must have the MIP a minimum of 5 years.