October 7, 2014
A reader asks, “We acquired FHA loan last April 2010 and refinanced it twice. Our original loan was 410k and our current bal is 383k. How can we eliminate the MIP and loan APR is 3.25%.”
Last year, FHA Mortgagee Letter 2013-04 announced changes to FHA loan policy for mortgage insurance premiums. That policy was altered to require MIP payments for the maximum duration allowed by law on FHA loans. According to the FHA official site:
“For loans with FHA case numbers assigned on or after June 3, 2013, FHA will collect the annual MIP for the maximum duration permitted under statute. See 12 U.S.C. § 1709(c)(2)(B).”
“For all mortgages regardless of their amortization terms, any mortgage involving an original principal obligation (excluding financed Up-Front MIP (UFMIP) less than or equal to 90 percent LTV, the annual MIP will be assessed until the end of the mortgage term or for the first 11 years of the mortgage term, whichever occurs first.”
Additionally, any FHA mortgage principal with a loan-to-value greater than 90% got the following rule change on MIP:
“FHA will assess the annual MIP until the end of the mortgage term or for the first 30 years of the term, whichever occurs first.” The 90% LTV calculation mentioned in the FHA quote omits the amount of any financed Up Front Mortgage Insurance Premium.
As you can see from these quotes from the FHA mortgagee letter, it’s impossible to tell from the reader question which of the two changes might affect this borrower. The current loan may or may not be affected by the new FHA MIP rules depending on the date the FHA loan case number was assigned.
Borrowers who are interested in knowing their MIP options should contact the lender to see what is possible or allowable under the terms of the current mortgage loan.
Don’t forget, as mentioned above, the date your FHA loan case number was assigned will determine how your MIP is handled based on the new rules.
Do you have questions about FHA home loans? Ask us in the comments section.
Joe Wallace has been specializing in military and personal finance topics since 1995. His work has appeared on Air Force Television News, The Pentagon Channel, ABC and a variety of print and online publications. He is a 13-year Air Force veteran and a member of the Air Force Public Affairs Alumni Association. He was Managing editor for www.valoans.com for (8) years and is currently the Associate Editor for FHANewsblog.com.
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