June 11, 2015
One commonly asked question about FHA loans involves when and how a borrower can stop paying FHA Monthly Mortgage Insurance Premiums. The information we’re discussing here does not apply to Private Mortgage Insurance, which something different than FHA Mortgage Insurance Premiums.
Since we’ve mentioned Private Mortgage Insurance, borrowers who have it, (called PMI for short) should know the following as published on the government website, ConsumerFinance.gov:
“The Homeowners Protection Act gives you the right to request that your lender cancel PMI when you have reached the date when the principal balance of your mortgage is scheduled to fall to 80 percent of the original value of your home. This date should have been given to you in writing on a PMI disclosure form when you received your mortgage. If you can’t find the disclosure form, contact your lender.”
That information pertains specifically to Private Mortgage Insurance. But what about cancelling FHA monthly mortgage insurance premiums? According to the FHA official site:
“If the periodic (monthly) mortgage insurance premiums are paid up for an FHA case before schedule (i.e., accelerated payments were made and the unpaid principal balance is 78% or less), the month and year the last monthly insurance premium is assessed (final bill date) can be changed by the servicer or holder of the mortgage.”
“However cancellation of the monthly premium can only be used for active risk-based cases that have a closing date after December 31, 2000 and a case number assignment date before June 3, 2013 and meet the eligibility requirements described in Mortgagee Letter 2000-46 (with Attachment). For mortgages with an FHA case number assignment date on or after June 3, 2013, the FHA insurance can be terminated by the servicer or holder if the mortgage is paid in full before the maturity date.”
As you can see by reading the above, this issue hinges on how the borrower has handled the FHA loan. And not all FHA loans may qualify for the “78% option” (as mentioned above). If you are interested in getting your loan to the requirements mentioned above, talk with your loan officer before the loan has closed if possible if you are in the early stages of the application process, or as soon as possible otherwise to get information on how soon you can get to the required LTV or payoff date.
Do you have questions about FHA home loans? Ask us in the comments section.
Joe Wallace has been specializing in military and personal finance topics since 1995. His work has appeared on Air Force Television News, The Pentagon Channel, ABC and a variety of print and online publications. He is a 13-year Air Force veteran and a member of the Air Force Public Affairs Alumni Association. He was Managing editor for www.valoans.com for (8) years and is currently the Associate Editor for FHANewsblog.com.
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