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:
- The reduction in LTV to the 78% threshold is due to the borrower having made principle prepayments
- 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.
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