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Private Mortgage Insurance

Sparkplug

Sparkplug

Well-Known Member
Oct 9, 2008
2,870
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Central Iowa
I have myself totally confused on this matter. In 2008 we built a home and in January 2009 at closing it was appraised at $340,000. We put 15% down so borrowed $289,000.

The lender should have automatically terminated the PMI (78%) at $265,000 but they did not. (16 months ago)

Can I ask them to apply the PMI payments that should have not been to the balance?
 
Sparkplug said:
I have myself totally confused on this matter. In 2008 we built a home and in January 2009 at closing it was appraised at $340,000. We put 15% down so borrowed $289,000.

The lender should have automatically terminated the PMI (78%) at $265,000 but they did not. (16 months ago)

Can I ask them to apply the PMI payments that should have not been to the balance?
Click to expand...

I would definitely call them to request that it is removed. Sometime there is a 2 year minimum, depending on the PMI company.
 
I don't know about retroactively paying down the mortgage.

I have heard though that getting rid of PMI is a big time pain in the ***. I have it marked on my calendar when we're scheduled to hit 80%. I'm going to start hassling right then.
 
It's worth a call. We just bought a new home and never saw a deal that would automatically cancel the PMI. Everything we saw said we needed to petition to have it removed after we passed 20% of the principal paid off.
 
Automatic Termination of PMI at 78%
The mortgage lender or mortgage servicer is required to terminate the collection of PMI when the mortgage has been paid down to 78% as long as you are current on your mortgage

Always current, actually ahead with payments every two weeks.
 
ISUKyro said:
It's worth a call. We just bought a new home and never saw a deal that would automatically cancel the PMI. Everything we saw said we needed to petition to have it removed after we passed 20% of the principal paid off.
Click to expand...

Should automatically terminate at 78% LTV, but there are sometimes restrictions at 80%. Your lender/mortgage servicer may require an updated appraisal be ordered at your expense to confirm the property's current value still provides for an 80% or lower LTV.

To the OP, get a copy of the PMI agreement, highlight the section regarding PMI deletion/removal, and write a letter to your mortgage servicer requesting removal and application of any funds you've paid for PMI past 78% be applied to principal or directly refunded to you. You'll want to look at your payment history and figure out exactly when you hit 78%, don't rely on them to do it for you (after all, they're apparently not aware as they would have already terminated it).
 
ISUAlum2002 said:
Should automatically terminate at 78% LTV, but there are sometimes restrictions at 80%. Your lender/mortgage servicer may require an updated appraisal be ordered at your expense to confirm the property's current value still provides for an 80% or lower LTV.
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This in my experience has been key. Homeowner needs to pay for a new appraisal to get PMI requirement dropped.
 
If he had to pay for an appraisal probably should have started that process a while ago, since your LTV is probably even better than 78% since real estate valuations are noticeably higher since 2009.

I always figured they would base it on the original LTV, and once it hit 78% it would drop off and not require a new appraisal. The only situations where I've seen people having to order an appraisal is if they put down a lump sum payment on the principal and/or think the value of their house has significantly increased.

Although I've never ran into that scenario, so I'm not 100% sure how that part of it works.
 
AnotherMNClone said:
I just bought a house and found it easier to buyout the PMI up front.

I never plan on paying for PMI.
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Sorry to be the bearer of bad news, but if you bought out your PMI upfront, then you paid for PMI. I am not a fan of PMI buyouts, especially if you make extra payments to principal.
 
PMI makes complete sense for the mortgage company. If you don't like it, put more then 20% down. As far as removing it, the mortgage company needs to make sure that it's down to 80% and the only way to accurately do that is by getting an appraisal. This is not directed to the OP.
 
Sparkplug- I work in the mortgage industry. If you want some assistance PM me and I would be happy to help you out.
 
In my experience, the lenders just don't rollover and say you have 80% equity in your house. You may likely need to pay for an appraisal at your expense to get the PMI removed.
 
When I had it removed on my last house, it was just a broker price opinion, cheaper than a real appraisal. I don't remember my lender, but it was one of the big ones.
 
Is getting off PMI based on assessment or loan value? We got our house for 10% less than assesed, put 10% down, and have paid a year and a half of payments and a few hundred extra every month.
 
JP4CY said:
Is getting off PMI based on assessment or loan value? We got our house for 10% less than assesed, put 10% down, and have paid a year and a half of payments and a few hundred extra every month.
Click to expand...

If it's a refi, it's based on loan amount, appraised value, and credit score. If it's a purchase it based on the same items, except they will use the lower of the purchase price or appraisal.
 
JP4CY said:
Is getting off PMI based on assessment or loan value? We got our house for 10% less than assesed, put 10% down, and have paid a year and a half of payments and a few hundred extra every month.
Click to expand...

So if you're confident that you have 20% equity you can try to get the PMI removed by calling your mortgage company. They will charge you for any fees and the cost of the appraisal.
 
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