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I am shopping for a loan now and I did have one bank tell me that PMI has to stay on a min of 2 years no matter what. And I have heard of stories that banks give you the run around when you reach their magic number and try to take off PMI. Others are lucky and get it taken off with no problem. Ask alot of questions to your broker and pick the best option for you not them.
Yes. I am going to ask a lot of questions. I had a feeling that it's possible it could stay on for a min of two years so I will need to talk to my agent about this in depth to make sure I know what I am getting myself into. Thanks for all the posts. It was helpful!
The two year minimum (which depends on the investor of your loan) is for borrower initiated PMI cancellation. The 78% LTV cancellation, which as discussed in this thread is based on the ORIGINAL amortization schedule (i.e. extra principal payments don't help) does not have a two year minimum.
The two year minimum (which depends on the investor of your loan) is for borrower initiated PMI cancellation. The 78% LTV cancellation, which as discussed in this thread is based on the ORIGINAL amortization schedule (i.e. extra principal payments don't help) does not have a two year minimum.
Boy, you need a "mortgage course" just understand all this crap! Thank you for the clarification.
There's no "trying" to get rid of once you're at 78% per the original amortization schedule - it's automatic cancellation. I ran an am schedule earlier on a sample $244,000 value (loan = 244,000 * 82% = 200,080) and I believe it was around installment #31, or approximately 2 1/2 years, that PMI would drop off automatically. Depending what the PMI costs and the interest rate on the second, it might make a lot more sense for me to get PMI.
I'd definitely want numbers run on both options so I could make a fully informed choice.
Not necessarily true. There are several requirements for the auto-drop, one of which, the loan must be current. Another is if you have not been current on your payments within the year prior to the time for termination or cancellation. A third is if you have other liens on your property. For these loans, your PMI may continue. Ask your lender or mortgage servicer (a company that collects your payments) for more information about these requirements.
I'm also a fan of the 2nd mortgage. And it doesn't even need to be a mortgage (like a 401K loan), but it's tax deductible if it is. See, with PMI, if you make over 100K, the PMI is money down the drain. I'm finding the only reason more people don't get quotes for it is because not too many lenders offer it. Keep asking around.
Not necessarily true. There are several requirements for the auto-drop, one of which, the loan must be current. Another is if you have not been current on your payments within the year prior to the time for termination or cancellation. A third is if you have other liens on your property. For these loans, your PMI may continue. Ask your lender or mortgage servicer (a company that collects your payments) for more information about these requirements.
Again, all these requirements can depend on the investor. For Fannie Mae, the only requirement is the loan is current.
OP I'm assuming you're talking about a 30-year loan? Because if you were doing a 15-year, you could do FHA and not have any PMI (although I guess you'd still have to pay some of their upfront fees), since:
Quote:
FHA's monthly mortgage insurance payments will be automatically terminated when these conditions occur:
For mortgages with terms 15 years and less and with Loan to Value ratios 90 percent and greater, annual premiums will be canceled when the Loan to Value ratio reaches 78 percent regardless of the amount of time the mortgagor has paid the premiums.
For mortgages with terms more than 15 years, the annual mortgage insurance premiums will be canceled when the Loan to Value ratio reaches 78 percent, provided the mortgagor has paid the annual premium for at least 5 years.
Mortgages with terms 15 years and less and with loan to value ratios of 89.99 percent and less will not be charged annual mortgage insurance premiums.
Nonetheless, it wouldn't really apply to the OP, but even on a 30-year FHA it sounds like the MIP is automatically cancelled at 78% LTV as long as you've paid it for at least 5 years.
OP I'm assuming you're talking about a 30-year loan? Because if you were doing a 15-year, you could do FHA and not have any PMI (although I guess you'd still have to pay some of their upfront fees), since:
[/list]Nonetheless, it wouldn't really apply to the OP, but even on a 30-year FHA it sounds like the MIP is automatically cancelled at 78% LTV as long as you've paid it for at least 5 years.
Again, all these requirements can depend on the investor. For Fannie Mae, the only requirement is the loan is current.
Actually, I was quoting the law: Homeowners Improvement Act of 1998
To say removal is automatic with Fannie Mae is misleading and wrong. Pages 200-10 thru 200-12 of the Fannie Mae Servicing Guide are just some of the pages that actually spell out step-by-step when removal is not automatic.
The two year minimum (which depends on the investor of your loan) is for borrower initiated PMI cancellation. The 78% LTV cancellation, which as discussed in this thread is based on the ORIGINAL amortization schedule (i.e. extra principal payments don't help) does not have a two year minimum.
Quote:
Originally Posted by SmartMoney
Actually, I was quoting the law: Homeowners Improvement Act of 1998
To say removal is automatic with Fannie Mae is misleading and wrong. Pages 200-10 thru 200-12 of the Fannie Mae Servicing Guide are just some of the pages that actually spell out step-by-step when removal is not automatic.
I stand by my statement, which is very specifically about 78% LTV termination. I am very aware that there are other methods of terminating PMI which have more requirements.
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