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Rural Development Loan

I read somehwere tht  you can cancel the PMI as soon as 2 years after a loan compared to a wait of at leat 5 years to cancel PMI on an FHA? Is this true and if so hhow do you go about doing this and  is there a penalty? I have a rural development loan w/ FHA. I never really understood this-but recently someone interpreted to me as having a second Mortgage???? I did have to make a down payment of 500.00; I was told it was for the rural development loand and I do have mortgage insurance.Thanks for helping me to understand this.
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January 14 2011 - Madison
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I think you are confused.  USDA has no monthly mortgage insurance. Rather they have an up front funding fee that is financed into your mortgage.  You must have FHA with a bond assited loan.

Your best bet is to call the servicer on your loan.  In our market we have bond loans which gives our buyers assistance to pay downpayments and closing costs.  Assistance used to be a give away, however, in recent years the assistance is takes the form of a second mortgage.The second mortgage is forgivable after ten years are so.

As for the mortgage insurance, good luck trying to get out of it early.  In the days of appreciating values, mortgage servicers were much more lenient in letting borrowers out of the mortgage insurance. Since the mortgage debacle, servicers are not so quick to let go of mortgage insurance payments.  Again, this is another question to ask your mortgage servicer.
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January 18 2011
It does not sound like you have a Rural Development loan. I think what you have is FHA. They are 2 different types, not a mix. It is true that you have to pay for a minimum of 5 years on FHA types. If you only put $500 down, and in the market we are in currently you may not have the equity to get rid of PMI any time soon. But if you think you have atleast 20% equity, you could refinance to get rid of the PMI. If you have FHA you will not have a pre-payment penalty. If you really do have a RD loan then you are not paying any PMI currently.
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January 14 2011
FHA requires 5 years.
Private sector PMI, you can petition the PMI removal after 2 years. but, its not gauranteed removal.
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January 14 2011

If you have a USDA loan, you dont have monthly PMI... Are you in a USDA loan?

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January 14 2011
 
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