Re: Evaluating Convention
al vs. FHA (VA & USDA)
04-14-2011 09:43 PM
"The monthly mortgage insurance needs to be paid for at least 5 years and also until the loan amount reaches 78% of the home's value at the time the loan was made (not current value)."
Thanks for this great article, Shane. As I've said many times before, I wish I'd participated in this forum before I bought my house!
This MI info is really encouraging, IF I understand it correctly.
I've been under the assumption that the 78% was based on current value....and with declining home values, this could potentially be difficult....or take quite a while. I figured I might never get out from under the MI.
So, if the house appraised at $200K at time of purchase, when loan balance reaches $156K (78% x $200K), and MI has been paid for at least 5 yrs, the MI can be dropped?!?!?
What is procdure for stopping the MI?? I'm still 3 yrs out (at the very least) since I re-fied March '09, but I'd like to plan ahead!
If the sales price was also $200k in your example, then your assumption is correct.
When your FHA loan meets the requirements of MI removal your lender should automatically stop charging you. However if you feel they have made a mistake then call them up, or call them up ahead of time (heck they may even know now), and go over your and their records. If you have in deed paid excess mortgage insurance then you would be owed a refund, find out if the lender has passed the mortgage insurance to HUD or if they still have it, if they have paid it to HUD then you'd contact them at the number listed at http://www.hud.gov/offices/hsg/comp/refunds/fhafac
Mortgages since 2002, all 50 states