When does
PMI stop
on Kentucky FHA,
USDA, and
Conventional Loans?
How Can I Get Rid of PMI?
Does PMI stop on my loan once I am under 80%? Not on all loans!
When does PMI stop on my loan?
Will PMI drop off? How can I remove PMI off my loan? Each type of
mortgage loan treats PMI ( Private Mortgage Insurance) differently. See below
for a quick summary!
Kentucky USDA Loans-
PMI is
for the
life of
the loan
PMI private mortgage insurance advantages & strategies for lower down payment and payment USDA has
an annual fee which is similar to PMI. The annual fee is
recalculated each year based on the
new balance of the mortgage. The annual fee is currently only .35 which began October 1, 2016. The annual fee
percentage on USDA
loans stays for the entire 30 year term but because it is based on the annual
mortgage balance. Therefore, the dollar amount decreases each year.
How to calculate monthly PMI for USDA loans: Loan amount x 1.0101% (USDA funding fee) x .0035 / 12 = monthly fee to include in the monthly mortgage payment.
Kentucky FHA Loan PMI often continues for
the life of the
loan, but
depends!
FHA has an
annual fee
but the
percentage varies depending on
the LTV
and the
loan term. The monthly amount of PMI is
recalculated each year based on the
new balance of the
mortgage and
the PMI
percentage.
The
length of
time that FHA PMI
stays on
the loan varies depending on the
loan term and LTV
as shown below:
Loans over 90% LTV
or more will pay
the annual PMI for
the complete term –
On a
purchase, this means less than 10% down
Loans equal to or
less than 90% LTV
will pay
the annual PMI for
11 years – Purchases over 10%
down payment
Loan terms
greater than
15 years
< $625,500: effective 1/26/15
> 95% LTV =.85 PMI
-< 95% LTV =.80 PMI
Loan terms 15 years or less
<
$625,500:
-< 90% LTV =.45 PMI
> 90% LTV =.70 PMI
Even though FHA PMI currently
continues for the life of the loan with less than 10% down payment, it is still
a great loan for
buyers. It
offers low
down payment, very competitive rates, and
flexibility on
many guidelines.
Kentucky VA home loans DO NOT have monthly PMI
VA loans do
not have monthly PMI
on any
of the
terms so
you don’t have to
worry about when it
continues. Like all government loans, VA does have a
funding fee
which is
an up-front fee that is customarily financed on
top
of the loan amount and
required by
the VA.
Although VA
does allow the Veteran or even the seller pay this fee! Additionally, qualified, disabled Veterans may be exempt from the VA funding fee. Ask about the requirements re: the waiver of
the funding fee.
Kentucky Fannie Mae or Freddie Mac
conventional loans have PMI
when the
LTV is
greater than 80% with either primary, second homes, or
investment properties. To cancel PMI on
a conventional loan, the
following typically needs to be
met. Here are some of the details to have
PMI stop as clarified by the Consumer Financial Protection Bureau in August 2015.
Borrower Requested PMI Cancellation: Once balance is
paid to
under 80%
of the
original price, the borrower may
request that PMI be
cancelled on
the cancellation date. The
cancellation date means either the date when the principal balance is
first scheduled to reach 80% of the original value (lower of purchase price or
appraised value) for the property or
date on which the principal balance reaches 80% of the original value based on actual payments. The
borrower may
make extra payments to
move the
cancellation date earlier.
Automatic PMI Cancellation: Once balance is
paid to
under 78%
of the
original price, the lender must cancel the PMI on the termination
date. The termination date is defined as the
date which the principal balance is first scheduled to
reach 78%
of the
original value for the
property. Although before cancelling PMI, the
loan must be current.
“Good payment history” means no
payments 60
or more days past due within 2 years and no
payments 30
or more days past due within 1 year of the later of the cancellation date or the
date you submit a request for cancellation.
** PMI could be cancelled on a conventional mortgage if the following conditions are satisfied:
You
submit a written
request for cancellation 
Borrower must be current on the
loan.
You are current on
the payments required by
your loan and if
requested and
at the
borrower’s expense, evidence satisfactory to
the note holder that the value of the
property has
not declined below it’s original value (value at the time of the
mortgage initiation), and that there are no subordinate liens on the property
Joel Lobb Mortgage Loan Officer
American Mortgage Solutions, Inc.10602 Timberwood Circle
Louisville, KY 40223
Company NMLS ID #1364
Text/call: 502-905-3708
fax: 502-327-9119
email: kentuckyloan@gmail.com
http://www.mylouisvillekentuckymortgage.com/
NMLS ID# 57916, (www.nmlsconsumeraccess.org).
