When can I remove my mortgage insurance???

By
Real Estate Mortgage Broker with Jamie Russen - Supreme Lending NMLS ID #95705

If you have a conventional mortgage, and put less than 20% down when you purchased your home ( or less than 20% equity when you refinanced your home ) your monthly payment includes "mortgage insurance".

Depending on your interest rate, for a 30- year term mortgage and if you put 5% down payment, it will take approximately 11 years to reach 78% loan to value; with 10% down, it will take you about 9 years, and with 15% down, 6 years.

If you have an FHA mortgage, mortage insurance is automatically included in your monthly payment.

Both types of loans have certain rules where mortgage insurance must be eliminated after a certain period of time - and under certain conditions.

Dropping Conventional Mortgage Insurance Rules:

Automatically Deleted When:

  • Mortgage balance is reduced to 78% LTV
  • LTV based upon ORIGINAL VALUE
  • Based SOLEY on regualr amortization ( not prepayment of principal )
  • Mortgage payment must be current

You Request Mortgage Insurance be Deleted

  • Mortgage balance is reduced to 78% LTV
  • Submit cancellation request in writing
  • Good payment history
  • Current on mortgage payments
  • Appraisal or Certification that property value has not decreased BELOW the original value
  • No 2nd liens or subordinated loans on property

Dropping FHA Mortgage Insurance Premium Rules

If your loan closed PRIOR to January 1, 2001 you are NOT eligible for termination of MIP ( monthly mortgage insurance premium ) if closed on January 1,2001 and after, MIP will automatically terminate under the following conditions.

More than 15-year term

  • Must pay for 5 years AND
  • 78% LTV based on original LTV

15- Year Term or less

  • if original loan amount is 90.01% or more, of the original appraised value, MIP will be terminated at 78%
  • 5-year minimum payment waived
  • if original loan amount is 90% or less, or the original appraisal value, NO monthly MIP was charged

SPEACIAL NOTE:

Loan to Value for purchases based on the lower of the sales price or appraised value

Loan to value for refiancnes abed on appraisal value

Loan to value figured on base loan amount WITHOUT the upfront mortgage insurance for FHA loans

close

Re-Bloggged 1 time:

Re-Blogged By Re-Blogged At
  1. Jon Quist 05/08/2011 08:10 PM
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Topic:
ActiveRain Community
Location:
New Jersey Camden County Cherry Hill Barclay Farm
Groups:
1st Time Buyers
31 Days of May Challenge 2011
Addicted to Active Rain
The FHA Mortgage Group
Tags:
mortgage insurance
fha
conventional
cancel mortgage insurance

Comments 3 New Comment

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Rainer
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Michael Kitsch
Coldwell Banker
Certainly very important details. .... Have a great week and thanks for the post!
May 08, 2011 07:58 PM
Rainer
57,540
Mark Nehs
Mortgage Loan Officer Waukesha Wisconsin

Yes mortgage insurance can be dropped and yes it is different for different types of loans.  Jamie, thanks for the thorough explanation.

May 08, 2011 09:10 PM
Rainer
8,142
Tanya Runkle
NMLS/MLO#307502
America's Premier Mortgage

Jamie, thank you for the post, our team does mostly VA Home Loans but this is a common question for Conventional and FHA buyers.  Thank you

May 09, 2011 06:16 PM
Anonymous
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Rainmaker
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Jamie Russen

100% Financing Specialist
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