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Ending PMI


Rick9972
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The normal is you have to have PI for 5 years then when you owe less than 78% of the value of the house you can drop it. Now each loan may be different but this is the common one I see. We just hit 6 years and our bank told us that we must pay for an appraiser to come out and evaluate the house to see where we are at.

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Worst case, when your loan is paid down to 78% of the initial loan amount, the bank must drop it.

Most of the time however, the lender will arrange for an appraiser to come out and if your loan is 78% of the current value, they will remove the Mortgage Insurance. Some will even remove it at 80%.

Charles

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Worst case, when your loan is paid down to 78% of the initial loan amount, the bank must drop it.

Most of the time however, the lender will arrange for an appraiser to come out and if your loan is 78% of the current value, they will remove the Mortgage Insurance. Some will even remove it at 80%.

Charles

Hmmm, ok here is the deal. I have been paying on this mortgage at a accelerated basis for 4 years. At least 1 full payment and twice 2 full payments extra each year. I am already at 77% of the Original value. My Bank is saying that they are not required to Automatic Terminate the PMI because it is based on the date your loan is "Scheduled" to reach 78% not when your loan actually reachs 78%. This "Scheduled" date is the one given on the Amortization Schedule as if I had not paid any extra.

The way I read the HPA is that when the balance hits 78% it is automatic, no matter how short of time or how long. Is this right?

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This is from PMI 's website FAQ:

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In addition, the federal Homeowners Protection Act (HPA) of 1998 requires that borrower-paid MI be cancelled automatically once the borrower has paid down the loan to an LTV of 78%, based on the original value of the property. And MI may also be cancelled by written request of the borrower once the principal balance is paid down to 80% of the original purchase price.†

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Now you have something to quote.

Charles

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Great thread. One thing to add. I went FHA in March '07. I was told by the lender at closing that even if I paid down the loan to 80% of the original balance, that the MI cannot drop off before the 60th month. Is this sort of penalty allowable?

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Great thread. One thing to add. I went FHA in March '07. I was told by the lender at closing that even if I paid down the loan to 80% of the original balance, that the MI cannot drop off before the 60th month. Is this sort of penalty allowable?

This was added in 2005. Monthly MIP may only be cancelled when the loan balance reaches 78% of the original loan value. MIP must also be carried through the first 60 months of the loan.

The only exception is if you were to go ahead and pay all premiums that would be due for the 60 months, but I doubt you would want to do that.

Up Front Mortgage Insurance Premiums are refundable only if there is a rate/term refinance on an existing FHA loan.

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I kind of figured, but that is unfortunate. It is $80/month out the window for the next 4 years. Maybe longer if I seriously don't start making multiple payments on this thing. The thing is, I bought this three-unit place because it was poorly managed and severely undermarket value. If I dump $15k into it, I can boost combined rental income from $1500/month to $2000/month and boost the property value by $75k. But according to the "78% of the original loan value" limitation, even with 30% equity, I would have to keep MI payments going until the remaining balance gets chipped away. A stupid rule. Gives me less incentive to invest in the property and improve the neighborhood.

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  • 2 weeks later...

I don't know why anyone hasn't posted this, but if you have that kind of equity in the property, why don't you refinance it? You'll get a better rate (esp. now) and won't have to pay MI anymore because of your equity.

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Worst case, when your loan is paid down to 78% of the initial loan amount, the bank must drop it.

Most of the time however, the lender will arrange for an appraiser to come out and if your loan is 78% of the current value, they will remove the Mortgage Insurance. Some will even remove it at 80%.

Charles

I agree with Charles about contacting your mortgage company and getting an appraisal by one of their appraisers.

I brought my house in 1993, putting 10% down for $105K. I refinanced in 2002 - (value was $380k), and found out I had still been paying PMI.

I was P:evil:ssed!!!! It worked out to almost $80,000 paid in PMI, and there was nothing I could of do to recoop any of it.

Thats when I started working in mortgages. Doing refinances and purchases, anything less than 20% equity, one would face PMI. Did not know about 78% - guess it depends on the mortgage company.

Good Luck.....:)

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