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FHA and Mortgage insurance.
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Posted by scryn (My Page) on Tue, Jan 23, 07 at 8:55
Ok, we have an FHA loan and we have to pay 78% loan to value ratio to get rid of our Mortgage insurance. Now, we have paid that IF you look at the value of our house (as it has gone up over the five years we have had the house) We haven't gotten down to 78% IF you look at the price we paid for the house. I called our mortgage bank about getting rid of the MI. The bank is a HUGE provider of mortgages (name brand, I won't mention it here) and it basically now a bunch of idiots who don't seem to know anything. The first woman I talked to said I would have to have MI forever, untill I pay off the entire mortgage.
So, I figure that they don't know much about what they are talking about so I thought I would ask you guys first...
Should the value of my house (being used to determine if I pay MI) be the FIRST appraisal, when I purchased the house OR the new house appraisal!?
They did send me a letter (finally) saying I would have to pay off over 10 grand to get rid of MI, however with my new house value I shouldn't have to do this.
thanks,
Renee |
Follow-Up Postings:
RE: FHA and Mortgage insurance.
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| Check your contract. That will spell out how long you continue to pay MI and under what terms it can be discontinued. Some states have passed laws requiring lenders to initiate the discontinuance of MI when equity reaches 20-22%, but the terms (measured against loan amount, measured against market value) may differ. |
RE: FHA and Mortgage insurance.
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| According to HUD it is calculated by the original value of the home. We got rid of ours by refinancing - rates had dropped and house values had risen, our new loan was for less than 78% of the value so no MI. Not sure if that works when interest rates aren't going down, you would probably have to crunch your own numbers to see if it makes sense for you. |
RE: FHA and Mortgage insurance.
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| you likely will have to refi to get rid of it, or wait until the principal is less than 78% of original value. |
RE: FHA and Mortgage insurance.
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| I am in a similar boat attempting to remove the MIP from an FHA loan. As a matter of fact, I just dealt with my incompetent mortgage company a few minutes ago and ended up having to write a letter to them because they wouldn't help on the phone. We are 2 months from our 5 years and owe less than 75% of the original loan value. The idiot I just dealt with at the mortgage company told me we were going to have to pay for an appraisal in order to remove the MIP- I'm steamed but pretty sure she didn't know what she was talking about since we owe less than 75% of what was originally mortgaged, current appraisal value shouldn't play into this at all for us. At any rate, I'm pretty sure FHA is stuck on the original principal of the loan rather than the market value and would guess that refinancing may be in your best interest depending on when you will get to that magic 78% of original loan value. If you haven't paid extra principal and it will be 2014 before you reach the 78% point, then refinance; OTOH if you've paid additional principal and will be at 78% soon, it may not be worth the refi effort. Good luck. |
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