Stuck in a pmi nightmare

[kyra's mommy]

Hi All,

We've been paying pmi for 5 years. It runs us $300 a month. That's 18k so far! We'd like to pay off the 20% which would require us to come up with $22k. That's not a problem, what is a problem is that the mortgage company is now suggesting that it might want 20% of current value not of the original purchase price. That's 70k. Also, our loan states that in 2014 it will automatically drop. That's what Citimortgage agrees to as they were our previous mortgage holder and the one we had a modification with. However, Nationstar who now owns our mortgage is saying it won't drop automatically until 2017. Anyone ever go through this nightmare before?

 

[Halbleib1]

Can't help you much now other than to say they have to go by the terms in your contract. They can not change them in the middle. For next time though keep in mind that you do not have to have PMI even if financing 100%. We have no PMI and financed all but closing costs on a new townhome.

 

[BuzznBelle'smom]

Not that exact nightmare, but something similar. We moved in 2008, didn't sell our old house first, so we only put 10% down. We came into some money, so we decided to refinance, and put more $$ down to get rid of PMI. Well, the appraisal came in much, much lower than we anticipated--we still think he's wrong, but we lost our appeal. We decided to pony up the extra down payment, figuring it would decrease our monthly payments. On the good side, we pay ~$1000 less per month now. I wish we didn't have to put so much directly into the house though--good-bye, nice new kitchen!

You have to remember, banks are being much, much more careful now than they were 5 years ago. That's actually a good thing, but it seems like people who walk away from bad mortgages get no consequence, and people who are diligent about finances and paying their bills get hosed. I may not have my fancy kitchen, but I sleep soundly at night.

If you can put down more to get rid of PMI, then I'd do it. Remember, the appraisal has no bearing on what you might actually sell the house for at some future point.

 

[cornflake]

Not that exact nightmare, but something similar. We moved in 2008, didn't sell our old house first, so we only put 10% down. We came into some money, so we decided to refinance, and put more $$ down to get rid of PMI. Well, the appraisal came in much, much lower than we anticipated--we still think he's wrong, but we lost our appeal. We decided to pony up the extra down payment, figuring it would decrease our monthly payments. On the good side, we pay ~$1000 less per month now. I wish we didn't have to put so much directly into the house though--good-bye, nice new kitchen!

You have to remember, banks are being much, much more careful now than they were 5 years ago. That's actually a good thing, but it seems like people who walk away from bad mortgages get no consequence, and people who are diligent about finances and paying their bills get hosed. I may not have my fancy kitchen, but I sleep soundly at night.

If you can put down more to get rid of PMI, then I'd do it. Remember, the appraisal has no bearing on what you might actually sell the house for at some future point.

Well depends. I mean the appraisal is based on comps and basics. If the comps don't change significantly by the time you go to sell, sure the appraisal can have a huge bearing on what someone may be able to sell the house for, as most banks/mortgae companies require the appraisal to cover the loan amount.

If it doesn't, they won't write the loan.

 

[Colleen27]

Our experience was the same regarding 20% of current value, as a current appraisal was required to support a 80% LTV before the PMI could be dropped. Our original LTV was 90% but the housing market fell apart right around the time we got that down to where we should have been able to drop the PMI. I'm glad we didn't spend the money on an appraisal before finding out that current value was what mattered, because at that point in time we owed 75% of the pre-purchase appraisal value but probably 300% of the then-current worth.

 

[Maggie'sMom]

Hi All,

We've been paying pmi for 5 years. It runs us $300 a month. That's 18k so far! We'd like to pay off the 20% which would require us to come up with $22k. That's not a problem, what is a problem is that the mortgage company is now suggesting that it might want 20% of current value not of the original purchase price. That's 70k. Also, our loan states that in 2014 it will automatically drop. That's what Citimortgage agrees to as they were our previous mortgage holder and the one we had a modification with. However, Nationstar who now owns our mortgage is saying it won't drop automatically until 2017. Anyone ever go through this nightmare before?

This is standard in the mortgage industry. You have to have 20% equity in your home in order to drop PMI. 10 years ago when home prices were increasing quickly, this worked to the borrower's advantage because they could have their home reappraised and get to the 20% using the increase in market value in addition to the payments made. Unfortunately, in a down market, you are experiencing the flip side. I've be shocked if there was a single mortgage lender that would base the 20% amount off the original loan amount and not the current value of the home.

 

[bridget]

Something similar happened to us. We started our loan with Countrywide and it got sold 3 different times. When we finally had the 20% down, they wouldn't take off PMI because "their" terms were different. I faxed them the copy that we signed and made a written request. It was taken off.

This was about 8 years ago. All I remember is that they would not look at PMI based on the equity in the house (if they would have, it would have been taken off much sooner). They went off the original loan amount.

Look at the contract that you signed to see what the terms are.

 

[Zerosinthecloset]

Seems like $300/month for PMI is somewhat excessive.

 

[kyra's mommy]

Seems like $300/month for PMI is somewhat excessive.

Yes! I agree with you!

 

[EMAW_KSU]

Seems like $300/month for PMI is somewhat excessive.

It depends on what the loan amount is.

 

[michelleh1]

We did not have to put any money down to get the pmi off our last mortgage. We just had to prove that we had 20% equity. Because of the increase in the value of our home, we got an appraisal and wrote a letter and it got approved and dropped.

If you already owe less than 80% of your home's value then you shouldn't have to put anything down.

It sounds to me like they are just trying to pull a fast one on you. Could you just re-finance and get away from your current mortgage company?

 

[Zerosinthecloset]

It depends on what the loan amount is.

If my rough figuring is right, if $22000 is 20% based on original home price, the house should be valued around $110,000 or so, PMI should be less than $100 a month. Never had to deal with it, but I'm sure someone will set me straight on what a reasonable PMI should be for this size of mortgage.

 

[GrnMtnMan]

It sounds to me like they are just trying to pull a fast one on you.

I don't think so....

We've been paying pmi for 5 years.

A home in Arizona, purchased or refinanced 5 years ago, is almost certainly worth much less than what it was worth in 2007. A quick Google-ing shows that homes prices are still down 40% or more from five years ago.

 

[angwill]

Hi All,

We've been paying pmi for 5 years. It runs us $300 a month. That's 18k so far! We'd like to pay off the 20% which would require us to come up with $22k. That's not a problem, what is a problem is that the mortgage company is now suggesting that it might want 20% of current value not of the original purchase price. That's 70k. Also, our loan states that in 2014 it will automatically drop. That's what Citimortgage agrees to as they were our previous mortgage holder and the one we had a modification with. However, Nationstar who now owns our mortgage is saying it won't drop automatically until 2017. Anyone ever go through this nightmare before?

They can require PMI on the value or on what you payed which ever gets the company more money. I hope you have an easier time getting it dropped with Nationstar than we did with Citimortgage who wanted us to have an appraisal done by their very overpriced appraiser before they would determin if they would drop the PMI and then there was a fee for them to do it on top of that. Some and maybe all Mortgage companies still take advantage of people with loans through them. Good luck.

 

[angwill]

If my rough figuring is right, if $22000 is 20% based on original home price, the house should be valued around $110,000 or so, PMI should be less than $100 a month. Never had to deal with it, but I'm sure someone will set me straight on what a reasonable PMI should be for this size of mortgage.

It should be under $100 for PMI on $110,000.

 

[angwill]

Can't help you much now other than to say they have to go by the terms in your contract. They can not change them in the middle. For next time though keep in mind that you do not have to have PMI even if financing 100%. We have no PMI and financed all but closing costs on a new townhome.

How do you buy and not have PMI if you did not put down 20%? When we bought we had no choice according to the finance company so I am curious.

 

[TiggerTails57]

Wow $300 a month for PMI does seem excessive!
Ours was $50 a month........we paid down our principal by sending checks every month marked "apply to principal" (and followed up to make sure they were applied correctly).
We now own 68.8 percent of our home!!

 

[TiggerTails57]

How do you buy and not have PMI if you did not put down 20%? When we bought we had no choice according to the finance company so I am curious.

If you get an 80/20 (Two loans) one for the 80% and one for the 20%. (I don't think they offer them much and more).

 

[hsmamato2]

keep in mind that you do not have to have PMI even if financing 100%. We have no PMI and financed all but closing costs on a new townhome.

Ummm....then why ,on every home loan we've had since beginning has the pmi question come up? We've had more than 20% equity for many years now, but at first,we had no choice. In fact,our last refi-less than 6 mos. ago,they mentioned how much equity we had,and that's why they didn't require that pmi .....just wondering where this info comes from...

 

[marlynnp]

If my rough figuring is right, if $22000 is 20% based on original home price, the house should be valued around $110,000 or so, PMI should be less than $100 a month. Never had to deal with it, but I'm sure someone will set me straight on what a reasonable PMI should be for this size of mortgage.

Your PMI assumption is correct. It's your assumption on the mortgage that is most likely wrong. They need to pay an additional $22,000 to have 20% equity NOT 20% equity=$22,000. For example, they could have a house valued at $500,000 and have $78,000 in equity already.