Dropping Conventional Mortgage Insurance Rules
Getting rid of the MI expense is not as easy as you would think. Here are the basics.
Automatic Termination
- Fixed Rate & Adjustable - Removed when reduced to 78% LTV
- LTV based upon ORIGINAL VALUE
- Based SOLEY on regular amortization (not prepayment of principal)
Additional Requirement:
- Mortgage payment must be current
- Borrower Requests Termination
- Fixed & Adjustable - Removed when reduced to 78% LTV
Additional Requirements:
- Submit cancellation request in writing
- Good payment history
- Current on mortgage payments
- Appraisal or Certification that property value has not decreased BELOW the original value
- No 2nd liens or subordinated loans on property
Dropping FHA Mortgage Insurance Premium Rules
Loans closed PRIOR to January 1, 2001 are NOT eligible for termination of MIP (monthly insurance premium) if closed on January 1, 2001 and after, MIP will be automatically terminated under the following conditions.
- More than 15-year term
- Must pay for 5 years AND
- 78% LTV based on original LTV
- 15-Year Term or less
- If original loan amount is 90.01% or more, of the original appraisal value, MIP will be terminated at 78%
- 5-year minimum payment waived
- If original loan amount is 90% or less, of the original appraisal value, NO monthly MIP will be charged.
NOTE: Loan-to-Value for purchases based on the sales price or appraisal value, whichever is lower
Loan-to-Value for refinances based on appraisal value
Loan-to-value figured on base loan amount WITHOUT UFMIP
Michael Reeve
Vice President, Residential Lending
First Bexley Bank
614-682-5252 Office
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