Federal Housing Administration (FHA) loans make affording houses accessible to prospective buyers with lower incomes. However, FHA loans require you to pay a mortgage insurance premium (MIP).
Thankfully, you may be able to start the FHA loan MIP removal process before the end of your mortgage. Here, our Champions Mortgage team can teach you how to remove MIP from your FHA mortgage. As a mortgage broker in Houston, TX, we are available any time for your MIP questions.
What Are FHA Loans?
FHA loans are a type of government-insured or government-backed mortgage loan. Most go to first-time buyers and seniors to increase their residence possibilities. You can get an FHA loan from FHA-approved lenders, such as banks, credit unions, and online lenders.
When Can an FHA Loan Help?
In most cases, a conventional, private-owned mortgage lender requires private mortgage insurance (PMI) if you cannot pay 20% or more down on your home. In contrast, all FHA loans require MIPs to help cover your lender for the same reason. Because of this mandatory coverage, you may still be able to get a house, even if:
- You have a low credit score
- You don’t have enough to pay private monthly premiums
- You don’t have enough money for a usual down payment
Potential Cons of MIPs
Part of your MIP comes as an upfront payment of around 1.75% of your desired loan. After that upfront payment, you must pay monthly fees to maintain your mortgage protection and insurance. While PMIs can fall off more easily, generally, you pay MIPs for the entirety of the mortgage’s lifespan.
However, you can still start an FHA mortgage MIP removal via the following MIP removal guidelines.
Ways To Cancel FHA Mortgage Insurance
Depending on when you received your mortgage, among other details, you may be able to eliminate the MIP from your FHA loan. Here’s how to remove MIP from an FHA mortgage.
Pre-Maturity Date
Your loan’s maturity date refers to the day you should have paid your mortgage in full. For example, if you and your lender approved a 20-year mortgage on July 14, 2023, your maturity date would be around July 14, 2043.
You can start an FHA case by paying more in monthly premiums to reduce your interest. If the unpaid principal balance is equal to or less than 78%, you can send an MIP cancellation request to your lender.
You can also request MIP cancellation if your FHA case number comes on or after June 3, 2013, and you pay your entire mortgage before maturity. You cannot cancel MIPs with case numbers before June 3, 2013.
Expiration
Another way to remove MIP is to wait for it to expire. Your FHA MIP expires after 11 years if you made a mortgage down payment of 10% or more.
Refinancing
You can stop MIP payments by refinancing your loan from a government one to a conventional one. However, you should only pursue this option if your property has a lower loan-to-value ratio. Otherwise, you may need to pay PMIs to receive new coverage.
Find Your Loan Opportunities Here
Are you ready to look for an FHA loan so you can purchase the home of your dreams? Now that you know how to remove MIP from your FHA mortgage, what are your next steps?
Champions Mortgage can help you cancel your FHA mortgage insurance premiums and also find great refinancing options. Our experts can walk you through every step so you comfortably and affordably settle into your new home.
Removing MIP from your FHA mortgage could be much easier than you expect. Call Champions Mortgage at (281) 727-2500 or visit our website to set up a meeting with our professional brokers today!
