If you get an FHA loan, does the PMI last forever! What if I am perfect in paying for like two years?

Question

If you get an FHA loan, does the PMI last forever! What if I am perfect in paying for like two years?

Answer 1

You do not have to pay it forever, but you DO have to pay it until the outstanding principal on your loan reaches 80% or less than what you originally paid for the property.  If the property values increase, it makes no difference.  With FHA, everything is based upon what you paid for the property when you purchased it.

Answer 2

"acermill" is correct.  Or unless you can get enough money together to refi into a conventional loan without PMI.  The PMI on an FHA loan is, in effect, the price you pay for getting a low-down loan.

Answer 3

PMI is based upon equity, not payments.  Once you have 20% equity in your home (based on a new appraisal usually,which you will have to pay for), you can request that your lender drop the PMI (in some states, it is a requirement that they drop the PMI - check with your state's attorney general).

Answer 4

PMI is paid until you have 20% equity (ex. you owe $80,000 or less on a home worth $100,000), and then you can request in writing to have it removed. It has nothing to do with how faithfully you pay, but rather how much of an equity cushion you have.

PMI isn’t the devil.  If you compare what you’re spending per month in PMI over the next five years vs. what you would have to come up with in cash to get rid of it, you just mind find that you’ll spend a ton less paying PMI than by coughing up the cash to get out from under it. For example, I’m going to pay out less than $1,000 in PMI over the time I plan to own my home; to get out of PMI, I’d have to give my lender close to $25,000. Why would I want to hand $25,000 to my lender today to save $1,000 over several years?

Answer 5

Um, like, maybe you should learn about how things such as FHA insurance and PMI work before even considering the notion of buying a house.