Filed Under: News
Question: Can I get rid of my monthly FHA mortgage insurance premium (MIP)? I believe my HUD case number was assigned before June 3, 2013, even though my loan closed after that date. How do I find the case number and date for certain?
My loan is 14 months old, and my appraisal qualifies the LTV ratio is better than 78 percent. Does this mean I qualify for MIP removal?
Answer: Like most issues regarding FHA financing canceling the annual mortgage insurance premium – the MIP – is not simple.
The cancellation rules for FHA loans with 3.5 percent down and a 30-year term differ from the rules for 15-year FHA loans and loans with at least 10 percent down. Also there are different standards for FHA-insured reverse mortgages and Title I financing. And – to make matters more confusing – dates also count.
The first thing you want to know is the case number and when it was issued. To find this information call the FHA’s National Servicing Center at 1-800-225-5342.
The magic date you want to find is June 3, 2013 because that’s when FHA cancellation policies changed.
Old FHA Mortgage Insurance Rules
Let’s assume that like most FHA borrowers you bought property with 30-year financing and less than 5 percent down. For FHA loans issued between January 1, 2001 and June 2, 2013 the cancellation rule looks like this:
First, the annual MIP will be automatically canceled when the
loan-to-value ratio reaches 78 percent.
Second, to be eligible for automatic cancellation the monthly MIP must have been paid for a minimum of five years (60 months).
Third, according to HUD. “cancellation of the annual MIP is normally based on the scheduled amortization of the loan. However, in cases where the loan payments have been accelerated or modified, cancellation can be based on the actual amortization.” In other words, if you have been prepaying your mortgage you may be able to cancel MIP more quickly but not before five years have passed.
New FHA Mortgage Insurance Rules
Under the new rules HUD says things are different for loans with FHA case numbers assigned on or after June 3, 2013.
First, if the loan term is more than 15 years and the original loan-to-value ratio was 90 percent or more you cannot cancel the annual mortgage insurance premium. It runs with the loan and only ends after 30 years or when the mortgage is paid off. Since most people use 30-year FHA financing and buy with 3.5 percent down this is the rule which most-likely applies.
Second, if you bought with at least 10 percent down and financed with a 30-year mortgage you can cancel after 11 years.
For details and specifics regarding your loan contact your mortgage servicer, the friendly and delightful folks who collect the monthly payments.
Syndicated originally to newspapers nationwide by Content That Works . Revised, modified, expanded and updated. Posted with permission.