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I received the following letter after requesting that my PMI payment be discontinued:

After reviewing your account, I have confirmed we can't cancel your mortgage insurance premium (MIP) at this time.

Stephen, please rest assured, the U.S. Department of Housing and Urban Development (HUD) may allow you to cancel your MIP early. You have met the following requirements of having your MIP paid through April 10, 2016, and no mortgage payments made over 30 days late in the last 12 months.

You still need to meet the following requirement of having an unpaid principal balance less than or equal to $106,353.00, which will bring your loan-to-value (LTV) ratio to the required 78% of the sale price or appraised value of your home at closing, whichever is lower. HUD will only use these values for your LTV and won't consider a new appraisal to determine your LTV. Your premium end date is June 10, 2021. If you continue to pay your mortgage on time, your mortgage insurance premiums will automatically cancel on this date.

The current appraised value of home is 198000 with loan balance of 113000.

Why was my request denied?

  • I have edited your post to include an actual question. Please let us know if you really intended to ask something different. – Ben Miller Apr 5 at 10:22
  • @BenMiller - Reopened. For the fact that I am aware of FHA rules, but hadn't seen such a question here, yet. – JoeTaxpayer Apr 5 at 12:36
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    Seems pretty clear. Your balance is greater than $106,353 and appraised value at closing was also significantly less. The current appraised value is irrelevant as also stated. – topshot Apr 5 at 13:56
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You don't have PMI, you have MIP. FHA loans are different than conventional loans.

Their paragraph explains it pretty well, they use the sale price or appraised value when you bought it and will not consider new appraisals. So you'll be paying MIP until LTV reachse 78% based on original price/appraisal amount, which will happen on the original schedule by June 10, 2021. To get away from MIP sooner you can either re-finance away from an FHA loan or make extra payments to decrease LTV to 78% (there's a 5-year minimum for early MIP removal but you're past that).

With a conventional loan automatic termination of PMI occurs when you hit 78% LTV based on the original value and the original mortgage schedule, and you can also get it removed earlier based on current LTV using new appraisal.

FHA loans have different rules for MIP based on down-payment, term, and whether the loan was applied for before or after June 3, 2013. For newer loans it either lasts for life of loan or 11 years.

You might be a good candidate for refinancing, just make sure to factor in refinance closing costs and not just the interest rate/MIP.

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    "unless you re-finance away from an FHA loan" Would an (at least theoretical) alternative be to over-pay the approximately $7,000 needed to take the outstanding balance (113k) to the 106k threshold? – TripeHound Apr 5 at 7:58
  • @TripeHound Yeah I muddled that up a bit, updated. – Hart CO Apr 5 at 13:51

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