Pmi?

[txgirl]

Are there any mortgage experts out there? Is there a "required" time period for PMI? Situation: 18 mths ago we bought our home for $180,000 (financed about 172,000) and now the same house (built same time in 2004) sold for $230,000 (crazy, huh ) So when we closed we were at about 95% loan-to-value. Can we get a new appraisal and have PMI dropped if we can get below 80% LTV? I think I remember our mtg lady saying it is hard to get them to drop it and there is a mininum time required for having it? You guys can probably answer me quicker than anybody at the bank!

 

[mom23boys]

Are there any mortgage experts out there? Is there a "required" time period for PMI? Situation: 18 mths ago we bought our home for $180,000 (financed about 172,000) and now the same house (built same time in 2004) sold for $230,000 (crazy, huh ) So when we closed we were at about 95% loan-to-value. Can we get a new appraisal and have PMI dropped if we can get below 80% LTV? I think I remember our mtg lady saying it is hard to get them to drop it and there is a mininum time required for having it? You guys can probably answer me quicker than anybody at the bank!

We also had PMI when we first moved into our house. Within 6 months the house went up in value. We were able to get a ew appraisal and the PMI was dropped. I would call your Mortgage Company, we had to use one of thier appraisers which I was nervous about but it worked out in the end. Good luck.

 

[DVCJEN]

It depends on how your individual contract. In theory, anytime you have achieved 20% equity (whether it's in 6 months time or 6 years time) in your property you should be able to drop the PMI by having a new appraisal and submitting a written request. Look back over your paperwork to verify if there was any verbage relating to a time minimum.

 

[tlbwriter]

Can we get a new appraisal and have PMI dropped if we can get below 80% LTV?

Yes. It's more difficult to get one *without* a new appraisal, but you should be able to get it with an appraisal. If you're not refinancing, you need to through your mortgage holder. Don't just go out and get your own appraisal, because they may not accept it, and you'll have to pay for another one. And if there are too many restrictions, consider refinancing - you'll get to start from scratch, and that puts you in a better position.

 

[mjmcca]

OK but what about if you pay down the mortgage to the point that you shouldn't need the PMI. How do you go about getting it taken off?

 

[CarolA]

CALL your bank. This has been a big issue that banks are not automatically taking it off. THey are required to take it off, but it's not like they tell you!

 

[mamalle]

keep calling. some have a clause like a year and they will keep putting you off but keep bugging them. good luck

 

[tlbwriter]

OK but what about if you pay down the mortgage to the point that you shouldn't need the PMI. How do you go about getting it taken off?

That depends on when you took out the mortgage. If you signed your mortgage after July 29, 1999, they are supposed to automatically drop the PMI after you have paid down 22% (not 20%) of the original value of your home (so this won't help you if you've hit 20% due to rising values instead of paying down the loan). If they haven't done that, call and remind them. And you can get it dropped when you hit 20% if you call and request it - they do not have to do it automatically until you hit 22%. There are exceptions to this law - it doesn't apply to VA or FHA loans, or if you've made late payments.

You can read more here:
http://www.ftc.gov/bcp/conline/pubs/alerts/pmialrt.htm

If you signed your mortgage before July 29, 1999, you can ask that PMI be removed, but they will not do it automatically.

 

[QT Pooh]

Definitely check with your mortgage lender. They'll need to do a re-appraisal in order to verify that the value really has gone up. There's certainly no value in paying money for PMI if you don't need to. There is no minimum time requirement for PMI payments...although a while back some banks were not reviewing the loan to equity ratio and they were paying PMI a lot longer than they should have been.

 

[Pooh_Friend#1]

There are exceptions to this law - it doesn't apply to VA or FHA loans, or if you've made late payments.

I have an FHA loan, so does that mean I can never get rid of PMI?

 

[tlbwriter]

I have an FHA loan, so does that mean I can never get rid of PMI?

Good question. I don't think so. I think it only means your lender is not obligated to automatically drop it when you reach a certain point. But you'd need to check with your lender and/or FHA to find out for certain.

 

[bdcp]

An FHA loan is always insured. It doesn't matter how much equity you have. The purpose of an FHA loan was to allow people to buy a home with a smaller down payment which used to be considered risky for the lender. They were introduced long before zero down payment, interest only, etc loans. They also allowed you to finance part of your closing costs. They're really not a good deal anymore with all the loan options out there. You have to refinance with a conventional loan to drop the PMI, assumng you have enough equity to do so.

 

[ducklite]

That depends on when you took out the mortgage. If you signed your mortgage after July 29, 1999, they are supposed to automatically drop the PMI after you have paid down 22% (not 20%) of the original value of your home (so this won't help you if you've hit 20% due to rising values instead of paying down the loan). If they haven't done that, call and remind them. And you can get it dropped when you hit 20% if you call and request it - they do not have to do it automatically until you hit 22%. There are exceptions to this law - it doesn't apply to VA or FHA loans, or if you've made late payments.

You can read more here:
http://www.ftc.gov/bcp/conline/pubs/alerts/pmialrt.htm

If you signed your mortgage before July 29, 1999, you can ask that PMI be removed, but they will not do it automatically.

This is EXACTLY correct! Great answer!

Anne

 

[ducklite]

I have an FHA loan, so does that mean I can never get rid of PMI?

Sorry, you don't have PMI. You pay your MI to the Federal Government, as they guarantee the loan, and no, unless you refi into a conventional loan with at least 80 LTV you will continue to pay it.

You might want to check into refiniancing though depending on your interst rate. FHA loans typically carry a rate at inception that is up to 1% higher than conventional rates, so it might actually be worthwhile to refi.

Anne

 

[ducklite]

An FHA loan is always insured. It doesn't matter how much equity you have. The purpose of an FHA loan was to allow people to buy a home with a smaller down payment which used to be considered risky for the lender. They were introduced long before zero down payment, interest only, etc loans. They also allowed you to finance part of your closing costs. They're really not a good deal anymore with all the loan options out there. You have to refinance with a conventional loan to drop the PMI, assumng you have enough equity to do so.

FHA loans also have looser credit and DTI criteria. When refinancing from an FHA into a conventional, the borrower must also be able to meet conventional standards in those two criteria as well.

Anne

 

[Pooh_Friend#1]

Thanks for explaining it to me.

 

[patsal]

My mortgage was taken out prior to 1999 and the lender refuses to remove the PMI though I have paid over 50% of my mortgage--I keep accelerating it. I have written, begged, etc. all to no avail. they will not let me drop it--any advice or suggestions--I do not want to refinance since it makes no sence to pay closing costs again.
Edited to add that I jsut checked and it is FHA--guess I just get to keep paying!

 

[YachtClubWoman]

We had a FHA mortgage and refinaced to remove the PMI. We went from a 30 yr mortgate at 7% (bought the house in March 1999). Refinance in 2003 for a 15 yr at 4.675 for less than 100 dollars more per month.

Originally we were told after 2 yrs we could call and have the PMI removed. When I researched this was not the case which is why we refinanced.

Good luck.

 

[FayeW]

Just curious, what is PMI? I'm guessing it is mortgage insurance that is required because you have a high ratio mortgage. In Canada, we are also required to have mortage insurance on LTV of 75% or more, but the premium is a percentage of the mortgage amount (varies based on the LTV) and it is only paid ONCE, on funding. You can pay it yourself on closing, but 99.9% add it to the mortgage amount, so the total mortgage is Purchase price - Downpayment + Insurance premium. In addition, if you own a home that is insured, sell it, and buy another that will also be insured, you can transfer the insurance from one property to the next, and just pay a "top up" if more premium is required.

I'm interested to see how mortgage loans differ in the US.

 

[tlbwriter]

Just curious, what is PMI? I'm guessing it is mortgage insurance that is required because you have a high ratio mortgage. In Canada, we are also required to have mortage insurance on LTV of 75% or more, but the premium is a percentage of the mortgage amount (varies based on the LTV) and it is only paid ONCE, on funding. You can pay it yourself on closing, but 99.9% add it to the mortgage amount, so the total mortgage is Purchase price - Downpayment + Insurance premium. In addition, if you own a home that is insured, sell it, and buy another that will also be insured, you can transfer the insurance from one property to the next, and just pay a "top up" if more premium is required.

I'm interested to see how mortgage loans differ in the US.

Sounds like the same thing. In the US, PMI (stands for Private Mortgage Insurance) is not "required" by law but I doubt you could find a lender who doesn't require it for LTV of 80% or more. I don't know if you have the option to pay it upfront - I've never seen that. The ones I've seen have always been added to the monthly payment. And it does not transfer from house to house - it is part of the loan.