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How to remove PMI from FHA Loan?

Discussion in 'FHA/HUD and VA' started by Al Merrick, Jul 14, 2009.

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  1. Al Merrick

    Al Merrick New Member

    0
    Jul 21, 2006
    Professional Status:
    Appraiser Trainee
    State:
    Arizona
    I hope this is the right forum and hopefully one of you might know the answer to this. I am being forced into a an FHA loan at the last minute even though we qualify for a conventional loan (long story) and we are concerned about paying off PMI. The mortgage lender thinks we can have in removed in 5 years through re-financing but the statement we signed states that you need to more or less pay off 22% of the principal which could take 10 years to pay off (?). Is there an easier way to remove PMI? I konw through a conventional loan all you need is an increase in value and a simple $350 appraisal and after some upgrades to the house it would seem easy to do but through this FHA loan it seems damn near impossible to remove any time soon. Anyone have a good answer?
     
  2. Randolph Kinney

    Randolph Kinney Elite Member
    Gold Supporting Member

    32
    Apr 7, 2005
    Professional Status:
    Certified Residential Appraiser
    State:
    California
    FHA is mortgage insurance. They insure the loan for the life of the loan.

    As far as I know, the only way to get rid of the FHA insurance part is to refinance the loan into a non-FHA loan.
     
  3. Mr Rex

    Mr Rex Elite Member

    85
    Jan 12, 2004
    Professional Status:
    Certified Residential Appraiser
    State:
    North Carolina
    FHA doesn't require PMI, its included in the rate as a "premium". Once you get to a 78% LTV, you are eligible to drop the "premium".
     
  4. Michael Tipton

    Michael Tipton Senior Member

    0
    Sep 25, 2005
    Professional Status:
    Certified Residential Appraiser
    State:
    Florida
  5. Al Merrick

    Al Merrick New Member

    0
    Jul 21, 2006
    Professional Status:
    Appraiser Trainee
    State:
    Arizona
    Can I get to that 78% Loan to Value by a simple appraisal once i THINK the property has gained that much value by doing a CMA?
     
  6. hglenbetts

    hglenbetts Senior Member

    2
    Dec 3, 2007
    Professional Status:
    Certified Residential Appraiser
    State:
    Michigan
    For 15 year or longer term loan, the MIP will remain in place for a minimum of 5 years.

    The HUD letter actually states that a new appraisal will not be done, but is based on a remaining balance of less than 78%, based on the original appraisal, or purchase price, which ever was less at the time of origination.

    www.hud.gov/offices/adm/hudclips/letters/mortgagee/files/00-38ml.doc
     
    Last edited: Jul 14, 2009
  7. Peacemaker

    Peacemaker Member

    0
    Oct 12, 2003
    Professional Status:
    Licensed Appraiser
    State:
    Arizona
    Don't believe anything the broker or lender tells you (or even FHA, if it's verbal). Get it from the HUD website.

    And I dunno what part of AZ you are in, but I wouldn't count on values increasing, anytime soon. Prices were flat for 8 years after the last crash, and, that wasn't as bad as this one. If you need a 20% increase in value, you may be waiting a long time.
     
  8. Don Clark

    Don Clark Elite Member

    3
    Jan 17, 2002
    Professional Status:
    Certified Residential Appraiser
    State:
    Virginia
    Correct. You have to apply to FHA for the MIP removal.
     
  9. Mike Garrett RAA

    Mike Garrett RAA Elite Member

    9
    Jan 14, 2002
    Professional Status:
    Certified Residential Appraiser
    State:
    Colorado
    PMI...Private Mortgage Insurance.

    MIP ... Mortgage insurance Premium

    Easiest way to get MIP removed is to refinance.
     
  10. Mike Boyd

    Mike Boyd Elite Member

    0
    Jan 18, 2002
    Professional Status:
    Retired Appraiser
    State:
    California
    I agree with Randolph, more or less. There are no time limitations to pay off a loan, all you need is sufficient equity.
     
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