If you have an FHA loan, you may be paying MIP or mortgage insurance premium, which is an additional cost on top of your monthly mortgage payments. This insurance protects the lender in case you default on your loan. However, once you have built up enough equity in your home, you may be able to get rid of MIP, which can save you thousands of dollars over the life of your loan. In this article, we will go over the steps on how to get rid of MIP on FHA loan.
Understanding MIP on FHA Loan
Before we get into how to get rid of MIP, let’s first understand what it is and why it is required. MIP is a type of mortgage insurance that is required for all FHA loans. This insurance protects the lender in case the borrower defaults on the loan. The amount of MIP you pay depends on the size of your down payment, the size of your loan, and the length of your loan.
How to Get Rid of MIP on FHA Loan
Getting rid of MIP on an FHA loan requires a few steps, but it can save you a lot of money over the life of your loan. Here are the steps you need to take:
Step 1: Determine If You Qualify
The first step in getting rid of MIP is to determine if you qualify. To do this, you need to have an FHA loan that was originated on or before June 3, 2013. If you have a newer FHA loan, you will have to pay MIP for the life of the loan.
Step 2: Build Equity in Your Home
The second step is to build equity in your home. This means that you need to pay down your mortgage so that you owe less than 80% of the value of your home. Once you reach this point, you may be able to get rid of MIP.
Step 3: Contact Your Lender
Once you have built up enough equity, you need to contact your lender to see if you qualify to have MIP removed from your loan. Your lender may require you to pay for an appraisal to determine the value of your home. If the appraisal shows that you owe less than 80% of the value of your home, you may be able to get rid of MIP.
Step 4: Submit a Request to Remove MIP
If you qualify to have MIP removed, you will need to submit a request to your lender. Your lender will review your request and determine if you are eligible to have MIP removed.
Step 5: Enjoy Your Savings
If your lender approves your request, you will no longer have to pay MIP, which can save you thousands of dollars over the life of your loan. You can enjoy the savings and use the extra money to pay down your mortgage or save for other expenses.
Other Options to Get Rid of MIP on FHA Loan
If you don’t qualify to have MIP removed from your FHA loan, there are other options you can consider. These include:
Refinancing Your FHA Loan
One option is to refinance your FHA loan into a conventional loan. Conventional loans do not require MIP, but they may have stricter requirements and higher interest rates.
Making Extra Payments
Another option is to make extra payments towards your mortgage. By paying down your mortgage faster, you can build equity in your home and reach the point where you can get rid of MIP sooner.
Selling Your Home
If you are unable to get rid of MIP through the above options, you may consider selling your home. By selling your home, you can pay off your mortgage and avoid having to pay MIP.
Conclusion
MIP on FHA loans can add up to a significant amount of money over time, but there are ways to get rid of it. By building equity in your home and following the steps we outlined above, you can potentially save thousands of dollars over the life of your loan. If you don’t qualify to have MIP removed, there are other options to consider, such as refinancing, making extra payments, or selling your home.
FAQs
- What is MIP on FHA loan? MIP or mortgage insurance premium is an additional cost on top of your monthly mortgage payments, required for all FHA loans. This insurance protects the lender in case the borrower defaults on the loan.
- When can I get rid of MIP on FHA loan? You can get rid of MIP on an FHA loan once you have built up enough equity in your home so that you owe less than 80% of the value of your home.
- What do I need to do to get rid of MIP on FHA loan? To get rid of MIP on an FHA loan, you need to contact your lender once you have built up enough equity and submit a request to have MIP removed.
- What are some other options to get rid of MIP on FHA loan? Other options to get rid of MIP on an FHA loan include refinancing your loan into a conventional loan, making extra payments towards your mortgage, or selling your home.
- Can I get rid of MIP on a newer FHA loan? No, if you have an FHA loan that was originated after June 3, 2013, you will have to pay MIP for the life of the loan.
People also ask
How to get rid of pmi on fha loan?
To get rid of PMI on an FHA loan, you need to have built up enough equity in your home so that you owe less than 80% of the value of your home, then contact your lender to submit a request to have PMI removed.