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  #1  
Old 07-14-2009, 06:11 PM
Al Merrick Al Merrick is offline
 
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Default How to remove PMI from FHA Loan?

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?
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Old 07-14-2009, 06:22 PM
Randolph Kinney Randolph Kinney is offline
 
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Quote:
Originally Posted by Al Merrick View Post
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?
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  
Old 07-14-2009, 06:26 PM
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Mr Rex Mr Rex is offline
 
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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".
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Old 07-14-2009, 06:42 PM
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Michael Tipton Michael Tipton is offline
 
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http://www.hud.gov/offices/hsg/comp/refunds/fhafact.cfm
  #5  
Old 07-14-2009, 07:33 PM
Al Merrick Al Merrick is offline
 
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Originally Posted by Mr Rex View Post
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".
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  
Old 07-14-2009, 07:50 PM
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hglenbetts hglenbetts is offline
 
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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
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Last edited by hglenbetts : 07-14-2009 at 07:55 PM. Reason: added link
  #7  
Old 07-14-2009, 08:42 PM
Peacemaker Peacemaker is offline
 
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Quote:
Originally Posted by Al Merrick View Post
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?
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  
Old 07-16-2009, 10:26 AM
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Don Clark Don Clark is offline
 
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Quote:
Originally Posted by Mr Rex View Post
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".
Correct. You have to apply to FHA for the MIP removal.
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  #9  
Old 07-16-2009, 11:19 AM
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Mike Garrett, RAA Mike Garrett, RAA is offline
 
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PMI...Private Mortgage Insurance.

MIP ... Mortgage insurance Premium

Easiest way to get MIP removed is to refinance.
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  #10  
Old 07-17-2009, 10:02 AM
Mike Boyd Mike Boyd is offline
 
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Quote:
Originally Posted by Randolph Kinney View Post
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.
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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