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Old 03-25-2015, 01:24 PM
 
26 posts, read 31,974 times
Reputation: 41

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We bought our house in December 2010. Our down payment was about 15% of the purchase price. Our mortgage is currently 81% of the original appraisal price. We pay PMI every month. We have never missed a payment or been late on a payment. The tax-assessed value of our home in 2014 is now about $5k higher than the property appraisal value when we purchased the home. We have not done any interior upgrades to our home, but we have done several exterior, including the back patio, front walk and driveway.

We'd like to try to drop our PMI. As I understand it, talking to a mortage broker yesterday, all I have to do is prove that the value in my home has gone up by more than $6k since the home was appraised 4+ years ago (based on our current mortgage balance) and they legally have to drop the PMI. We can accomplish this by having an appraisal on our home done by an bank-approved appraiser.

He added that based on his knowledge of the property values in our town, the market today vs. 2010, and our tax assessed value of our home this should be "a cake walk." However, I've heard that often they just stick with the original appraisal number and that banks don't have to accept a new appraisal.

Has anybody had any luck with dropping PMI early, is it worth the effort/cost of the appraisal and process with the bank?

Thanks in advance for your help.
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Old 03-25-2015, 01:49 PM
 
64 posts, read 52,748 times
Reputation: 129
Quote:
Originally Posted by Ravine View Post
We bought our house in December 2010. Our down payment was about 15% of the purchase price. Our mortgage is currently 81% of the original appraisal price. We pay PMI every month. We have never missed a payment or been late on a payment. The tax-assessed value of our home in 2014 is now about $5k higher than the property appraisal value when we purchased the home. We have not done any interior upgrades to our home, but we have done several exterior, including the back patio, front walk and driveway.

We'd like to try to drop our PMI. As I understand it, talking to a mortage broker yesterday, all I have to do is prove that the value in my home has gone up by more than $6k since the home was appraised 4+ years ago (based on our current mortgage balance) and they legally have to drop the PMI. We can accomplish this by having an appraisal on our home done by an bank-approved appraiser.

He added that based on his knowledge of the property values in our town, the market today vs. 2010, and our tax assessed value of our home this should be "a cake walk." However, I've heard that often they just stick with the original appraisal number and that banks don't have to accept a new appraisal.

Has anybody had any luck with dropping PMI early, is it worth the effort/cost of the appraisal and process with the bank?

Thanks in advance for your help.
The FHA has reduced mortgage insurance premiums as of 1/26/2015 - you may be eligible. We closed last August and are eligible. It's not going to eliminate our PMI but it's going to reduce by $200/month.
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Old 03-25-2015, 02:41 PM
 
Location: Austin
7,078 posts, read 16,903,265 times
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To REMOVE the PMI, you need to have a minimum of 5 years on the mortgage. Once you hit 5 years, then you can obtain an appraisal to drop it. Otherwise, the only other way to drop it is to refinance into a conventional mortgage because today's FHA PMI will stay on the loan for the life of the loan.

You've been there under 5 years, so you'll need to wait.
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Old 03-25-2015, 05:03 PM
 
7,672 posts, read 9,337,360 times
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Quote:
Originally Posted by opus123 View Post
The FHA has reduced mortgage insurance premiums as of 1/26/2015 - you may be eligible. We closed last August and are eligible. It's not going to eliminate our PMI but it's going to reduce by $200/month.
How is that? I had researched it and it said only loans from Jan 26th. 2015 and newer can get the lower rates. Any loans before that date are not eligible.

Are you talking about refinancing? Our lender said we had to wait 12 months before refinancing. We will when we reach the 12th month, we have 25% equity now.

Here's a link to the new rates FAQ: http://portal.hud.gov/hudportal/docu...remiumsFAQ.pdf
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Old 03-26-2015, 10:05 AM
 
64 posts, read 52,748 times
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See link below for clarification by HUD:

FHA Clarifies Mortgage Insurance Premium Cuts | FHA News and Views
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Old 03-26-2015, 10:19 AM
 
7,672 posts, read 9,337,360 times
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Quote:
Originally Posted by opus123 View Post
Quote:
Some FHA loans eligible for the MIP reductions might fall into a “twilight zone” of timing where they COULD be eligible depending on whether or not a new FHA loan case number can be assigned to them.


As in the FAQ link I posted, if you haven't closed on your loan, you could qualify by asking for a new case number assigned to you. But if you closed, you aren't eligible. I called my bank. In my case, I have to wait 12 months before I can refinance to get rid of the MIP/PMI.
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Old 03-26-2015, 11:47 AM
 
Location: Annandale, VA
5,098 posts, read 4,125,323 times
Reputation: 4199
Quote:
Originally Posted by FalconheadWest View Post
To REMOVE the PMI, you need to have a minimum of 5 years on the mortgage. Once you hit 5 years, then you can obtain an appraisal to drop it. Otherwise, the only other way to drop it is to refinance into a conventional mortgage because today's FHA PMI will stay on the loan for the life of the loan.

You've been there under 5 years, so you'll need to wait.

I refinanced my FHA loan yesterday. I switched to a conventional 80/10/10 loan to eliminate the PMI. I am now saving over $300/month and all of my interest is now tax-deductible where the PMI was not.
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Old 03-26-2015, 02:14 PM
 
26 posts, read 31,974 times
Reputation: 41
Quote:
Originally Posted by FalconheadWest View Post
To REMOVE the PMI, you need to have a minimum of 5 years on the mortgage. Once you hit 5 years, then you can obtain an appraisal to drop it. Otherwise, the only other way to drop it is to refinance into a conventional mortgage because today's FHA PMI will stay on the loan for the life of the loan.

You've been there under 5 years, so you'll need to wait.
Thanks. Would have been nice if the broker at Chase had shared that tidbit when we went over all the numbers, as opposed to telling me it would be a "cake walk" and all I had to do was prove increase in value.
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Old 03-26-2015, 03:09 PM
 
Location: OH>IL>CO>CT
4,751 posts, read 7,508,936 times
Reputation: 6359
Quote:
Originally Posted by Spaten_Drinker View Post
I refinanced my FHA loan yesterday. I switched to a conventional 80/10/10 loan to eliminate the PMI. I am now saving over $300/month and all of my interest is now tax-deductible where the PMI was not.
PMI is/was deductible, with some limits, for mortgages issued after Dec 2006.

See the Line 13 instructions for IRS 1040 Schedule A, and the worksheet at bottom on page A-9 at :

http://www.irs.gov/pub/irs-pdf/i1040sca.pdf
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Old 03-26-2015, 03:58 PM
 
4,544 posts, read 11,551,865 times
Reputation: 3068
Quote:
Originally Posted by Ravine View Post
We bought our house in December 2010. Our down payment was about 15% of the purchase price. Our mortgage is currently 81% of the original appraisal price. We pay PMI every month. We have never missed a payment or been late on a payment. The tax-assessed value of our home in 2014 is now about $5k higher than the property appraisal value when we purchased the home. We have not done any interior upgrades to our home, but we have done several exterior, including the back patio, front walk and driveway.

We'd like to try to drop our PMI. As I understand it, talking to a mortage broker yesterday, all I have to do is prove that the value in my home has gone up by more than $6k since the home was appraised 4+ years ago (based on our current mortgage balance) and they legally have to drop the PMI. We can accomplish this by having an appraisal on our home done by an bank-approved appraiser.

He added that based on his knowledge of the property values in our town, the market today vs. 2010, and our tax assessed value of our home this should be "a cake walk." However, I've heard that often they just stick with the original appraisal number and that banks don't have to accept a new appraisal.

Has anybody had any luck with dropping PMI early, is it worth the effort/cost of the appraisal and process with the bank?

Thanks in advance for your help.
Rates are lower now than 2010. What interest rate are you at? Just refi and 'poof' the PMI is gone (assuming you are at 80% or less LTV which it certainly sounds like you are). You can most likely improve your interest rate with $0 closing costs.
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