An FHA borrower obtained their loan in 2012 with a 95% LTV. They have been paying annual MIP for 11 years and the current loan balance is 82% of the original property value. The borrower requests MIP cancellation. What action should be taken?
Correct Answer
A) MIP cancellation is approved immediately
For FHA loans originated before June 3, 2013, with original LTV greater than 90%, annual MIP can be cancelled when the loan balance reaches 78% of the original property value, regardless of the time period. Since this loan has a balance of 82%, it hasn't yet reached the 78% threshold for automatic cancellation.
Why This Is the Correct Answer
For FHA loans originated before June 3, 2013, with original LTV greater than 90%, annual MIP can be cancelled when the loan balance reaches 78% of the original property value, regardless of the time period. Since this loan has a balance of 82%, it hasn't yet reached the 78% threshold for automatic cancellation.
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A borrower is comparing two loan offers: Loan A has no points and 4.5% interest rate, Loan B has 2 points and 4.0% interest rate. The loan amount is $400,000. How much will the borrower pay upfront for the points on Loan B?