Home Buying in 94086>Question Details

Rashu, Home Buyer in 95054

Can I cancel the 5 year MIP on a 30 year FHA loan by selling or re-financing?

Asked by Rashu, 95054 Sun Sep 19, 2010

For 30 year FHA Loans, the 0.55 percent MIP amt is to be paid for 5 even if LTV is over 78 percent. Can I cancel / terminate the MIP by refinancing to conventional after 3 years? In an other scenario, In case I sell the house after 3 years - what happens to the remaining 2 years of MIP which I did not pay?

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The MIP is tied to the loan. When you refinance or sell that loan is paid in full and it ends. If you refinance with less than 20% down or less than 20% equity it may require MIP again. You may want to look at buying down the principle on the loan so that you the equity 20% or higher. Call a trusted lender and run some options by them.
Web Reference: http://terrivellios.com
1 vote Thank Flag Link Sun Sep 19, 2010
On the same note, I am planning on doing the same. I just bought home 5 months back and I paid 4 payments already. Now I am planning to move to Conventional loan.
Loan amount was: $745K and MIP I paid is around 2.25%. House value was: $874K. Right now the payments are $5402.00 / month (including Property tax).

I want to move to Conventional Loan now. Will I get back by 2.25% (pro-rated) back?

Thanks & Regards,
Murali
0 votes Thank Flag Link Wed Oct 13, 2010
If you purchased your home three years ago, your property now has de-valued. If you were the "average" FHA borrower you put 3.5% down. Before you do anything, I suggest you find out what properties like yours are selliing for today. To discuss your options, please contact me.
Web Reference: http://www.umboc.com
0 votes Thank Flag Link Sat Oct 2, 2010
Hi Rashu

You should have no issue canceling the MIP, unless of course it is a Hope loan or a loan prior to 2001.
I doubt you have either and it is straight forward FHA loan.

Let me know if I can help Feel free to call or email.

Good luck.
Perry
4086565343
Web Reference: http://www.ruthandperry.com
0 votes Thank Flag Link Sat Oct 2, 2010
Yes - All the posters on trulia are very helpful, and really knowledgeable. I don't know why there was so much negative press in the last 3 years about everyone dealing with real estate transactions.
0 votes Thank Flag Link Mon Sep 20, 2010
Isn't is great to have a place where you can ask a question and get such fast and accurate answers. Big shout ot Trulia!

Marcy Moyer
DRE 01191194
Web Reference: http://www.marcymoyer.com
0 votes Thank Flag Link Mon Sep 20, 2010
Rashu;

My concern is the 5 year MIP. Of course if you sold the home it would be gone and if you refinaced it would also be gone but you will need enought equity in the home. At least 80 %. However if you have a contract with FHA that you will not cancel that for at least 5 years you may have some kind of pre pay penalty. I would contact your lender to confirm what the actual contract says.
The FHA Mortgage Insurance Premiums, mostly commonly referred to as MIP, are charged by HUD to protect investors against default. Using these premiums paid into a fund, HUD Guarantees the performance of every FHA loan and protects a percentage of the lender's investment. In return, this mandatory premium enables borrowers who might not otherwise fit within Freddie/Fannie conventional guidelines, to receive funding for the purpose of buying a home or refinancing at conventional mortgage rates.
Good Luck
0 votes Thank Flag Link Sun Sep 19, 2010
When you refinance, the new lender will require an appraisal. I believe that if you do not have at least 20% equity, you may still be required to carry mortgage insurance even on a conventional loan. I recommend that you speak directly to a mortgage professional (maybe one of those below) that can help you figure it all out.
0 votes Thank Flag Link Sun Sep 19, 2010
Rashu,

If you refinance (to a conventional loan) or sell the home, the remaining MIP is waived. If you refinance into an FHA loan, the timetable will begin anew on the 5 years.
Good time to refinance! John
0 votes Thank Flag Link Sun Sep 19, 2010
If you pay off an FHA mortgage either by refinancing to a conventional mortgage or by selling the property, you are no longer responsible for FHA mortgage insurance.

Barbara
0 votes Thank Flag Link Sun Sep 19, 2010
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