Cancel Mortgage insurance on HUD loan

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My lender is telling me on a HUD loan (the one where you only pay 3% down) that you have to pay the mortgage insurance for the entire term of the 30-year loan, even after you have met the usual FHA guidelines to have it dropped. Has anyone ever heard of this?

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For fha loans which originated before Jan 1 2001, mortgage insurance does not get cancelled. Only way out of it is to refinance with a conventional lender.

colin · Posted: Wed Jun 06, 2007 4:28 pm Post subject:

Hi Kim,

Welcome to Mortgagefit forum.

If your loan closed on or after January 1, 2001, then the annual mortgage insurance premium (AMIP) will get automatically canceled when these conditions are met:

Any mortgage with term of 15 years or less & loan to value ratio of 90% or more, the annual mortgage insurance premium will get canceled when LTV comes down to 78% and

For any mortgage with a term of more than 15 years, the annual mortgage insurance premium gets canceled when loan to value ratio reaches 78% & borrower has paid the AMIP for at least 5 yrs.

Colin

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FYI Kim, for loans that originated prior to January 1, 2001, at the time the house is sold or loan is refinanced the borrower is entitled to get a refund of certain amount of mortgage insurance.

Read more about it from here : http://www.hud.gov/offices/hsg/comp/refunds/fhafact.cfm

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