When can I drop the Mortgage insurance premium on my FHA loan?

Posted on Sep 8, 2012 in FHA Information

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Question by jenna k: When can I drop the Mortgage insurance premium on my FHA loan?
I have to pay MIP on my loan . It is our first house and an FHA loan. The purchase price was 139k . I paid 10k down and had the mortgage insurance premium($ 1920.) financed in the loan at 1.5 %. I emailed chase and they sent a letter saying they are the servicer of the loan and cant drop it…. HUD will have to. I looked at HUDs website and they say they cant drop it , discount the mortgage company has to.

When I spoke to the rep on the phone(could barely understand her) She said 3 conditions must be met. It must be paid for a minimum of 5 years, approved be current, and LTV ratio reach 78%.

HUD has a specific link on the wesite giving conditions , but its hard to understand. I asked the mortgage rep if I could get a new appraisal since weve made improvements and drop it. She said I could but we would have to contact HUD with the new appraisal. She also said the LTV ratio is not on the loan price , but the purchase price(before down payment.) Noone there is helpful and would like some answers.
To be clear, after the down payment, the loan 129920. was 129k plus the mip of 1920. I am confused about the LTV. Is it the new appraise value % compared to the purchase price? (She said not counting down payment) Is this amount before the financed 1920 mip? Who do I contact with the appraisal to drop it? Both are telling me the other one has to drop it. I get the distinct feeling that Chase does not want be to drop it. Had this loan 3 years. I pay at least $ 100.00 additional principal each month. Never been even one day late.

Please someone give me specifics of what I would need to do to get it drop. It would save $ 53. a month I could put toward my principal and that is a lot of interest saved- thousands. I have painted , put on new roof and added skylights. Carpet is next. What specifically do I do and what are the laws with HUD? Which one has to drop it? I keep gettng the run around. You can email me with any more details needed. thanks
Please dont respond with promotions or solicitations. I only want the law concerning dropping the mip. I have a great rate and am in no way behind.I have no other loans and I am in no way drowning in debt(thus paying extra principal) My loan is going great, just thought I would eliminate any uneeded extra payment.

Best answer:

Answer by dk
What the rep told you is correct, and yest 78% of the ORIGINAL purchase price. This is one disadvantage of FHA loans, but on the upside… you did get into the house.

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  1. Where to start….
    First the mortgage insurance can be drop once you reach 79.99% Loan-to-value(LTV), you can contact an appraiser to come out and do a new appraisal, you can find this in a the phone book. I t will cost you $ 400, roughly depending on the appraiser.
    As for making extra payment on your loan, the Federal government did a study a few months ago and found that paying extra on your loan does not help with anything and actually can cost you more in the long run. I recommend that you read a book call “Missed Fortune” by Doug Andrews, you need to read about 20 pages of the book to understand a little about the financial side of mortgages or you can email be a I will send you a summary of the book.

  2. FHA requires that you have MI for at least 5 years even if it drops below 78% LTV. If you had it for 2 years I don’t think they will drop the MI. If you want to compare if it’s worth refinancing to a new mortgage without MI I will be more than happy to take a look at it and advise you if it would be worth it. It all depends on the rate you have now and the LTV etc. It costs you nothing to find out and no obligation on your part. Drop me a e-mail and I will help.

    Leo Namiot – Wells Fargo Home Mortgage