If you are considering a Refinance of your FHA Home Loan, like many folks in North Carolina, we need to talk about when you closed on your mortgage. Because FHA is really just a giant insurance program, they’ve changed their insurance rates and terms MANY times in the past 5 years trying to keep the Mortgage Insurance Fund solvent. The Mortgage Insurance fund, which we refer to as FHA PMI, covers Banks against borrowers going into default – so basically, it’s Foreclosure Insurance for the Bank.
FHA Home Loans have two FHA PMI premiums charged on each loan. One part of the FHA PMI Premium is charged up front, at closing, and it is generally added to the loan amount. The second part of FHA PMI is what is paid on a monthly basis.
In the past few years, there’s been some opportunities for the FHA PMI paid on a monthly basis to be “cancelled.” But answering the question of “When Does FHA PMI Get Cancelled?” is NOT a “one size fits all answer” – because FHA’s changed what it does with regards to this at least a dozen times.
When Does FHA PMI Get Cancelled?
Depends on when you took your loan out.
Beginning in June of 2013, the monthly FHA PMI fees will stay on the loan, for the life of the loan if you make less than a 10% down payment. If you got your loan within the last couple of years, you were required to keep the FHA PMI in place for at least 60 payments and until you reached at least a 22% equity position or a LTV of 78%.
The EXCEPTION to this rule is if you sell or refinance your home in the first 36 months of closing. If that happens, then you might be eligible for a REFUNDED percentage of the upfront FHA PMI Premium.
This newest FHA PMI cancellation policy applies to FHA loans beginning June 2013, and doesn’t change if you have a 15 year or 30 year mortgage. With loans taken out after that point, FHA PMI will no longer be cancelled, or drop off of your loan if you make less than a 10% down payment. Unless you refinance into a different type of mortgage program, or you pay your mortgage off – the FHA PMI will be on your loan clear through the last payment.
We have many North Carolina homeowners who are just sick of paying any kind of PMI. When we are talking to those folks, we generally suggest options to pay their mortgage down, to create the equity required to refinance without needing PMI. In those cases, we generally need a new appraisal.
Special FHA PMI Rates for FHA Home Loans Endorsed Prior to June 1, 2009
For FHA Home Loans that have an endorsement date PRIOR to June 1, 2009 – FHA will lower its Upfront FHA PMI Premium on your new FHA loan to just .01 percent. This compares to the current Upfront FHA PMI Premium of 1.75%… that’s a HUGE incentive!
For the “Special″ Streamline FHA Program (Endorsed Prior To June 2009), FHA will also charge an annual FHA PMI premium of .55 percent (which you divide by 12). This is NOT significant for those with mortgages taken out prior to May of 2009, as your current FHA PMI monthly mortgage insurance for FHA is exactly that same .55 percent.
There is some opportunity that the new FHFA Commissioner could move Endorsement date for this “special” FHA Streamline Refinance Program of June 1, 2009 date back to May of 2010 – which would be good news for thousands of homeowners who want to refinance!
Lowest FHA PMI Rates in 2015 for Streamline Refinances
The lowest FHA PMI Rates shown below are for loans that were taken out after January 25, 2015. We have almost NO ONE who wants a FHA Streamline refinance to a 15 year term. Most of those folks in North Carolina qualify for a Conventional loan – so if you are interested in FHA Streamline PMI rates for a 15 year loan, please call us.
- 30-year loan terms with loan-to-value over 95% : .85 percent annual FHA PMI
- 30-year loan terms with loan-to-value under 95% : .85 percent annual FHA PMI
For folks who want to do a FHA Streamline Refinance with terms of 20 years or 25 years pay an additional 0.20 above these rates.
To calculate these rates, simply take your loan amount and multiply it by the factor, then divide that amount by 12. Remember that the loan amount will also include the upfront FHA PMI charge of 1.75%. That up front fee can be paid at closing, although very few of the borrowers in North Carolina that we work with do that.
We’ll be glad to help you learn more about the When Does FHA PMI Get Cancelled, or about other refinance programs. We can also help you do a Streamline Refinance for an Investment Property you no longer live in Too – just give us a Call! Steve and Eleanor Thorne 919-649-5058. We’ ve saved some families, this year, over $320 a month! That’s a RAISE, or a Car Payment! So, call us, and let’s see if it makes sense for you to refinance!