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FHA UFMIP Cancellation

By
Mortgage and Lending with Guild Mortgage Company

FHA's Mortgage Insurance Premium (MIP) will be automatically canceled uder the following conditions:

  • Terms greater than 15 years, the annual mortgage insurance premiums will be canceled when the LTV ratio reaches 78% provided the mortgagor has paid the annual MIP for at least 5 years.
  • Terms of 15 years or less and with LTV ratios of 90% and greater, the annual MIP will be canceled when the LTV ratio reaches 78%, regardless of hte length of time the borrower has paid the annual mortgage premiums.
  • Mortgages with terms of 15 years and less and with LTV ratios less than and equal to 89.99% will not be charged annual MIP.
  • FHA determines when the 78% LTV ratio is reached based on the contract interest rate and teh LTV in their system.
  • Borrowers may request cancellation of the collection of the monthly MIP through the lender for those mortgages that reach the 78% threshold in advance of the scheduled amortization if all the following conditions are met:
  1. The reduction in LTV to the 78% threshold is due to the borrower having made principle prepayments
  2. It has been at least five years from the date of closing and the borrower has not been 30 days delinquent on the mortgage in the previous 12 months.

Note: The borrower cannot order a new appraisal to meet the 78% threshold.  HUD will only base the LTV calculation off the lesser of either the sales price or appraised value that is in their data-base when the loan was closed.