| Author |
Previous Topic | Next Topic |
|
mkulikoff
32 Posts |
 Posted - 05/05/2008 : 11:39:23 AM
|
I thought MI on an fha loan goes away after 5 yrs. I have a client who says there lender wont release it because of the ltv & now they want the mi to continue until 2014. I thought (perhaps mistakenly) that the mi would go away after 60 mos regardless of how much the home appreciated... your thoughts please.... and by the way, any of you bitter souls out there need not be rude or spiteful in replying, I really just need help, not a lecture about how your the king of FHA & I'm an idiot for not knowing the answer here.
God Bless |
|
dkendall1979
11072 Posts |
Posted - 05/05/2008 : 11:40:31 AM
|
| If not lesser than 78.8% LTV after 5yrs, the lender can opt to keep the monthly MI recurring. |
|
|
jpar994
885 Posts |
Posted - 05/05/2008 : 11:42:10 AM
|
| 78.8% of the Total Loan amount not the Appraised value of the hOme! You must have at least 5 years of payment to opt out of the MI |
|
|
MisterVA
6767 Posts |
Posted - 05/05/2008 : 12:29:39 PM
|
| You cannot simply get an appraisal for FHA. It is the ORIGINAL sale price or appraised value that determines when it can drop off. |
|
|
csmith51
300 Posts |
Posted - 05/05/2008 : 1:05:11 PM
|
| In most cases, the insurance will drop off after five years, or when the remaining balance on the loan is 78 percent of the value of the property, whichever is longer. |
|
|
slants
4301 Posts |
Posted - 05/05/2008 : 1:07:27 PM
|
So it would be based on when the amortization schedule shows enough payments have been applied towards the principle balance to be below 78.8% of original price/appraisal LA? One sample file I looked at will take almost 9 years to reach 78.8%. So the 5 year number is only a factor if the borrower overpays their principle during the 1st 5 years and pays the balance down sooner than the scheduled payments. |
|
|
jpar994
885 Posts |
Posted - 05/05/2008 : 1:08:56 PM
|
Once again it has nothing to do with the value of the property! If that was the case then you wont have MI on Loans under 78% LTV. IT is based on the Total Loan amount when the balance reaches 78% of the total loan amount
NOT the APPRAISED VALUE OF THE HOME |
|
|
nowbroker
1485 Posts |
Posted - 05/05/2008 : 1:17:35 PM
|
| On a typical FHA loan, they will be paying the MI for many, many years. As mentioned before they use the lower of the Original sales price and the Original value to calculate it. The only way it will drop off in 5 years is if you have made substaintial extra monthly payments to the principle, or had a lower LTV loan to start with. |
|
|
jpar994
885 Posts |
Posted - 05/05/2008 : 1:20:19 PM
|
So here is the question,
If I do a REfi for a CLient at 85% and they pay on it for 2 years down to 78.8 % they will eliminate their MI?
Please show me how this will work!
|
|
|
jpar994
885 Posts |
Posted - 05/05/2008 : 1:23:31 PM
|
FHA Q&A
Reader Gerald asked, Does either of the packages address whether or not PMI will be required with deposits of less than a certain percentage, and what would that percentage be?
Actually, FHA loans do not use PMI, but rather mutual mortgage insurance (MMI). MMI is made up of an upfront mortgage insurance premium (MIP) and monthly mortgage insurance (MI).
The upfront MIP is required for all borrowers with less than a 20% down payment. On a 30-year fixed-rate loan the MIP is 1.5% of the total loan amount. Any unused portions of the MIP can be refunded within 84 months of loan term (7 years).
The monthly MI is .05% of the total loan amount per year. Borrowers who put down at least 10% on a 15-year loan are exempt from paying monthly MI. For the rest of borrowers paying monthly MI, it is cancelled after 78% of the principle has been paid off. For this cancellation to happen, borrowers must have made all MI payments on a 30-year loan for five consecutive years.
|
|
|
slants
4301 Posts |
Posted - 05/05/2008 : 1:23:38 PM
|
quote:
Originally posted by jpar994
So here is the question,
If I do a REfi for a CLient at 85% and they pay on it for 2 years down to 78.8 % they will eliminate their MI?
Please show me how this will work!
I see what you're saying. It's 5 years OR 78.8%, but based on original value or original loan amount? Seems like you're right it's LA, only makes sense. |
|
|
BB
989 Posts |
Posted - 05/05/2008 : 1:30:18 PM
|
quote:
Originally posted by jpar994
FHA Q&A
Reader Gerald asked, Does either of the packages address whether or not PMI will be required with deposits of less than a certain percentage, and what would that percentage be?
Actually, FHA loans do not use PMI, but rather mutual mortgage insurance (MMI). MMI is made up of an upfront mortgage insurance premium (MIP) and monthly mortgage insurance (MI).
The upfront MIP is required for all borrowers with less than a 20% down payment. On a 30-year fixed-rate loan the MIP is 1.5% of the total loan amount. Any unused portions of the MIP can be refunded within 84 months of loan term (7 years).
The monthly MI is .05% of the total loan amount per year. Borrowers who put down at least 10% on a 15-year loan are exempt from paying monthly MI. For the rest of borrowers paying monthly MI, it is cancelled after 78% of the principle has been paid off. For this cancellation to happen, borrowers must have made all MI payments on a 30-year loan for five consecutive years.
There is no longer a refund of upfront MI during the first 7 years. If you refinance to a new FHA loan in the first three years then you can get a prorata share of it credited towards your new MI premium. |
|
|
MisterVA
6767 Posts |
Posted - 05/05/2008 : 1:34:15 PM
|
| Refinancing to conventional if there have been improvements to the property, real estate appreciation, & principal reduction IF ltv will be at or below 80% is the only way to avoid the 5 year/78% rule. Don't let your client get worked up about it though. The next 3 years, MIP is tax deductible. |
|
|
jpar994
885 Posts |
Posted - 05/05/2008 : 2:04:23 PM
|
So did I win?
Yeah the MI is tax deductable to people who earn less than 110k Jointly So if that works then it is tax deductable!
|
|
|
csmith51
300 Posts |
Posted - 05/06/2008 : 1:09:45 PM
|
quote:
Originally posted by Banker0679
In most cases????? Who gets 22% equity in their homes within 5yrs?
quote:
Originally posted by csmith51
In most cases, the insurance will drop off after five years, or when the remaining balance on the loan is 78 percent of the value of the property, whichever is longer.
Hence the longer. If you take a FHA loan with 200,000 value at 97% ltv for a loan amount of 194,000 at 6.5% interest rate, it will take over 11 years to reach 78.8% ltv assuming only 12 payments per year. |
|
|
| |
Previous Topic | Next Topic |
|
Search for: 
