How to cancel FHA mortgage insurance?
I purchased a home May of 2012 with Wells Fargo and FHA at 3.75. I did alot of upgrades and improvements in the last year and I want to try to get rid of my FHA insurance. How do I start looking into cancelling it to lower my payments?
Great answers thanks...further initially the appraised value when I purchased the home was $6000 more than our purchase price. I since upgraded all electric, installed new appliance, new siding, new pvc fence around a large property, new wood floors, installed CAC, refurbshed cabinets. I am contimplating extending and redoing our driveway soon but def sometime next year. My real estate lawyer told me I would be able to remove this insurance eventually when our value of home increases 20%. I think it should be now if not close to it.
- Steve DLv 77 years ago
Two problems - first, your improvements may not have provided you with enough extra equity to reach the 22% level you need to cancel FHA mortgage insurance. Most home improvements return about 66% of the investment in terms of appreciation - in other words, if you spent $20,000 in home improvements, you can expect your appraised value to go up about $13,500.
Next, you cannot cancel the insurance until May of 2017. FHA mortgage insurance lasts a minimum of 60 months regardless of your equity.
- jelinek121Lv 47 years ago
You will need to pay for a new appraisal to assure you have the 20% that they require. You are lucky to fall in these guidelines. If you got an FHA loan now the PMI won't be able to go away. I got PMI before the window in which you could do away with PMI.
If you have a problem, you can get a new loan. I just figured out my rate with PMI included was 1.25 percentage points higher, so I am getting my loan rewritten now.
- chatsplasLv 77 years ago
Paid professional appraisal showing value;
Analysis of your equity in property
Contact lender for their forms, their steps; they may choose appraiser
PMI is required when a buyer pays less than 20% down because they are a riskier borrower
Depending on when you bought, terms of your loan, you can remove PMI by showing your equity is above threshold, by increase in market price, payments of extra principal, improvementsSource(s): real estate investor
- Go with the flowLv 77 years ago
How confident are you that you have 20%+ equity from the current appraisal value?