I have an FHA loan that I have had for 5 years now. My understanding when I took out the loan was that 5 years must elapse before the PMI can be dropped. The appraised value of my home is apx. $230k. I owe $155k on the loan and $35k on a Home Equity loan. Do I qualify to drop the PMI?
fhacam.com
FHA Choice Appraisal Management
For some reason, I didn’t think it could be dropped on an FHA loan, but I may be wrong.
YES ask your mortgage co, for details
Directly from HUD:
FHA will determine when a borrower has reached the 78% LTV ratio based on the lesser of the sales price or appraised value at loan origination. For example, if the lesser of the sales price or the appraised value at origination was $100,000, when the loan amount reaches $78,000, HUD will no longer collect MIP on the loan.
FHA’s regulations do not permit a borrower to submit a new appraisal to reach the threshold for termination of MIP. Termination of MIP will normally be based on the scheduled amortization of the loan.
To make it simple, FHA does NOT recognize current value appraisals for purposes of PMI termination. It’s based upon the purchase price OR the appraised value at the TIME of PURCHASE, whichever is less.
Sorry folks. as a mortgage professional for 6+ years the answer is no! FHA requires a monthly MI premium payed directly to HUD for the life of your loan. It is sadly the method in which they fund the program.
Even if you financed 10% of the value of your home, you would be requried to pay MI for the life of your FHA loan. That is a major advantage of a conventional mortgage vs. an FHA loan. sorry. if I can help please do not hesitate to contact me.
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Ryan C.