Eliminating Mortgage Insurance

Eliminating Mortgage Insurance Premium By Refinancing To FNMA

Gustan Cho Associates are mortgage brokers licensed in 48 states

This BLOG On Eliminating Mortgage Insurance Premium By Refinancing To FNMA Was UPDATED On January 22nd, 2019

Homeowners with FHA loans will have a mortgage insurance premium for the life of the FHA loan of 0.85% of the mortgage loan amount every year. There is a way in eliminating mortgage by refinancing FHA loan into a conventional loan.

  • Borrowers who have conventional mortgages and have less than 20% equity on a home purchase will be required private mortgage insurance

Homeowners need to pay the private mortgage insurance premiums on conventional loans until the loan to value is at 80% LTV or lower.

Why Is Mortgage Insurance Required?

The main purpose of mortgage insurance is to protect lenders in the event borrowers default their mortgage loan.

  • For FHA loans, the mortgage insurance premium is 0.85% of the balance amount
  • Conventional loans, the mortgage insurance premium varies depending on the amount of down payment
  • There is no fixed rate on private mortgage insurance with conventional loans
  • Borrowers credit scores, type of property, down payment, market conditions are all factors in private mortgage insurance on conventional loans

FHA Loans is a fixed 0.085% of the FHA Mortgage Loan Balance.

Eliminating FHA Mortgage Insurance Premium

For homeowners who have FHA loans, the 0.085% mortgage insurance premium can be a big portion of their monthly mortgage payment.

  • The only way to eliminate that hefty mortgage insurance premium is to refinance the FHA into a conventional loan with at least 20% equity
  • Conventional loans are credit score sensitive unlike FHA loans
  • To prepare to refinance current FHA into a conventional loan, the borrower should start working on their credit
  • Should be making sure that they pay their monthly credit obligations on time
  • Make sure that you have various types of credit trade lines such as three credit cards, installment loans, and auto loans
  • With credit card debt, make sure credit balance does not exceed 10% of the credit limit
  • To get the best possible mortgage rate on conventional loans, borrowers should have a 740 credit score or higher
  • Borrowers who do not have 20% equity, no worries
  • There are conventional programs where the lender pays the mortgage insurance
  • However, the rates are slightly higher
  • For the best available mortgage rates on a conventional loan with no mortgage insurance, homeowners should have at least 20% equity
  • 25% of equity will get homeowners even lower mortgage rates

Home prices are steadily increasing so while borrowers are boosting credit scores, home is probably appreciating at the same time where borrowers can get the best of both worlds.

Eliminating Mortgage Insurance Premium On Conventional Loans

If the home appreciates and homeowners feel they have 20% equity in a home, borrowers can request the lender to eliminate private mortgage insurance. Or can pay down mortgage balance so it reaches 20% equity.

  • Not all lenders will eliminate mortgage insurance premium just because they have 20% equity or are paying down mortgage balance so loan to value is at 80% LTV
  • If the current lender is giving borrowers a hard time, the best way of getting rid of mortgage insurance premium is to refinance the current mortgage into a new conventional loan
  • In the event homeowners do not have 20% equity, there are new conventional mortgage programs that do not require the borrower to pay mortgage insurance
  • It is called LPMI conventional loan program, Lender Paid Mortgage Insurance

LPMI is where lenders will be responsible for the monthly mortgage insurance in lieu of a slightly higher mortgage rate or an upfront private mortgage insurance premium.

How To Get Started In Eliminating MIP

Real Estate Values have increased nationwide. Many counties in California, Texas, Florida, Illinois, Utah, Ohio, District Of Columbia, New Mexico, Georgia, Alabama, Arkansas, Tennessee, Oklahoma, Indiana, Iowa, Minnesota, Wisconsin, Michigan has seen home values appreciate year after year. Many homeowners do not realize that they may have 20% equity or close to it. Many homeowners can qualify for refinancing their FHA Loans into Conventional. Contact us at Gustan Cho Associates to see the amount of money you can save by refinancing to eliminate mortgage insurance premiums.

Qualify For Mortgage With Direct Lender With No Overlays

Homeowners interested in learning about the LPMI conventional mortgage loan program where they no longer need to pay mortgage insurance, please contact us at Gustan Cho Associates at 800-900-8569 or text us for faster response. Or email us at gcho@gustancho.com. Eliminating Mortgage insurance is at the fingertips for many homeowners. Refinancing their FHA Loans to Conventional Loans is the fastest way of Eliminating Mortgage insurance.

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