Eliminating PMI From FHA Home Loans Issued Prior To June 3, 2013

Many home buyers who have FHA mortgages were interested in the low down payment requirement. Since PMI is often required on mortgages with less than a 20% down payment, most FHA borrowers have PMI payments. The process for eliminating that fee depends on when the mortgage was issued by FHA. Below is an overview of eliminating PMI from FHA home loans issued prior to June 3, 2013.

Eliminating PMI Gradually

With every monthly payment submitted, you pay down a fragment of your loan. In the early several years, the amount towards interest is greater than the amount for the principal, but this slowly shifts. PMI is ultimately eliminated when the loan drops to 78% of the initial purchase price. You can also make extra payments to principal to reach this point sooner.

With most loans, you can request that PMI be eliminated when the loan reaches below 80%. It is definitely a wise move to track this and save more money. Read your mortgage terms to see if this is available to you.

Shift in Market Prices

If home prices increase, you may be able to eliminate PMI ahead of schedule. Lenders use the loan-to-value ratio, which is calculated from the purchase price or the updated appraised amount of a property. If prices increase in a short time, your principal might be lower than 80%, which could eliminate the PMI. You must order an appraisal from your Lender to explore this option. The Lender will send you an invoice for the cost, but it pays for itself if your PMI disappears as a result. Also, you must have your loan for 5 or more years before eliminating PMI.

Additional Details on Eliminating PMI From FHA Home Loans

Loan terms usually get modified over the years. This information is merely a review of traditional FHA mortgage conditions. Be sure to check your particular mortgage documents regarding eliminating PMI from FHA home loans. You can also call your loan specialist for more specific assistance.

About Mini Major

Mini views the purchase or sale of a home as a major life transition that usually evokes a wide array of challenges and emotions She brings her strong analytical, communication, and mediation skills to that process. For buyers, she helps to assess realistic goals and maps out a facilitation strategy that is uniquely designed to meet their individual styles with limited stress. For sellers, she provides honest, factual information necessary to set the right price and, together with the extraordinary resources of the Bean Group, provides state-of-the art marketing materials to present that property with appeal to the most appropriate potential buyers.

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