HOW TO GET RID OF YOUR FHA MORTGAGE INSURANCE TODAY!
An FHA loan was a great strategy for you at the time.
The good news is that you can cancel your FHA mortgage insurance today.
There are two methods of removing your FHA mortgage insurance, commonly known as FHA MIP.
Method #1: Check your Loan Balance – Get Rid of FHA Mortgage Insurance
- The loan is in good standing
- The loan was opened prior to June 3, 2013
- You’ve paid your loan for 5 years if you have a 30-year loan. If you have a 15-year loan, there’s no 5-year minimum.
- Your loan balance is at or below 78% of the last FHA appraised value, usually the original purchase price.
Method #2: Make a Plan to Refinance out of it – Get Rid of FHA Mortgage Insurance is a Great Financial Decision
You can request cancellation of your FHA mortgage insurance when you meet certain requirements.
If you bought a house with a 30 year FHA loan some years back, you may be eligible call your servicer to cancel your FHA PMI today. If your loan balance is 78% of your original purchase price, and you’ve been paying FHA PMI for 5 years, your lender or service must cancel your mortgage insurance today — by law.
While a low balance is a sure-fire way to cancel FHA mortgage insurance, it can take a while to get there. On a 30-year fixed FHA loan, it could take you about ten years to pay your loan down to 78% of the original purchase price. If you’re not quite there, continue making payments for a few more years, or make a one-time principal payment.
Once you hit the magical 78% loan-to-value ratio, you can potentially start saving hundreds per month, and keep your existing FHA loan and interest rate intact.
Cancelling FHA mortgage insurance is also possible by refinancing into a conventional loan. It’s often the quickest and most cost-effective way to do it. And it can be the only way to do it if you opened your FHA loan on or after June 3, 2013, when FHA mortgage insurance became non-cancellable.
With today’s rising home values, homeowners might be surprised how much equity they have. With a refinance, you can use your home’s current appraised value rather than the original purchase price.
Consider Replacing FHA mortgage insurance with conventional PMI
Conventional private mortgage insurance, or PMI, has to be paid for just two years, then is cancellable. Converting your FHA mortgage insurance to conventional PMI is a great strategy to reduce your overall cost. Conventional PMI is usually much cheaper than FHA mortgage insurance, and you can cancel it much more easily.
You can often refinance into a conventional loan with as little as 5% equity.
When your new conventional loan balance reaches 78% of the home’s value, you can cancel conventional PMI. Some lenders and servicers will even let you cancel when you reach 80% of your home’s current value.
In as little as two years, you could be rid of mortgage insurance forever. Compare that with a minimum of five years for FHA, and a maximum of 30 years if your FHA loan was opened after June 3, 2013.
Get rid of FHA mortgage insurance with a loan that doesn’t require PMI
If your home has about 20% equity based on today’s value, you can cancel your FHA mortgage insurance using a conventional refinance, often within 30 days, and you can start today.
You might have more equity than you think. Some areas of the country like Phoenix and Las Vegas have seen 20% to 30% appreciation over the past few years. Use your new-found equity to discontinue your FHA mortgage insurance. Refinance into a new loan that does not require mortgage insurance of any kind, and do it immediately.
For instance, if you purchased your home for $200,000 with an FHA loan, and the home is now worth $250,000, there’s a good chance you can remove your FHA mortgage insurance now.
Check with us to see if you qualify to remove your FHA mortgage insurance.
When you’re buying a home, you’re mainly focused on getting into a place where you can set down roots and build a solid future. You probably weren’t too concerned about the FHA PMI costs at that time.
But now that you’re settled in, it’s time to think about getting rid of FHA mortgage insurance. These high monthly costs could and should be going into savings, a child’s college fund, or toward loan principal.
Don’t delay. Even if you’re not able to cancel your mortgage insurance today, let’s make a plan for how you’re going to do it in the future.
Ten or twenty years down the road, you’ll be glad you did.
Homeowners who want to eliminate their FHA mortgage insurance should lock in a refinance before rates rise.
It’s possible to keep a similar rate or even drop your rate when you refinance out of an FHA loan. You could save a lot of money every month in interest and mortgage insurance.
Contact us today! A quick phone call will determine your savings, and it’s free to find out!702-326-7866www.iLendLasVegas.com