How to get rid of PMI? (insurance, second mortgage, refinance)

[A-BIG-NOTHING]

Hello all...
i bought a SFH in 08....and at the time, i had to pay the Private Mortgage Insurance....I bought the place for about 375k, it appraised for 385k by an appraiser that i was told is very strict. my assessment for 08 was for 460k and in 09, it's down to 375k.

i wanted to know if someone can tell me what the criteria is for getting rid of the PMI. (something like 20% equity...right? is there a time constraint before i can apply?)

[ChristineVA]

I think the deal is that as long as you have 20% equity, you could get rid of it. You would have to pay to get the appraisal, although I think some places were waving that and looking at county appraisals.

[kevinm]

You need 20% equity to qualify to cancel your PMI. You can do this at ANY TIME. Years ago, legislation was passed that your PMI was supposed to automatically be cancelled once you paid down your loan to get the 20% threshold. Before, people continued to pay for PMI eventhough they were eligible to cancel it and PMI had no interest in telling you since it was free money for them.

The only way to cancel PMI for you NOW is to refinance. You will need to get a first trust for 80% of your mortgage and a second trust for the remaining 20%. PMI is only paid to the holder of your first trust so by having a mortgage for 80% of your first mortgage, you are not required to purchase PMI.

[typical guy]

Originally Posted by kevinm

You need 20% equity to qualify to cancel your PMI. You can do this at ANY TIME. Years ago, legislation was passed that your PMI was supposed to automatically be cancelled once you paid down your loan to get the 20% threshold. Before, people continued to pay for PMI eventhough they were eligible to cancel it and PMI had no interest in telling you since it was free money for them.

The only way to cancel PMI for you NOW is to refinance. You will need to get a first trust for 80% of your mortgage and a second trust for the remaining 20%. PMI is only paid to the holder of your first trust so by having a mortgage for 80% of your first mortgage, you are not required to purchase PMI.

Many major banks won't offer loans when there is a second mortgage involved now. I think Virginia has a special deal with a second mortgage for the closing costs but I'm not sure they'll cover 20%. It might only be for the closing costs in FHA loans.

[A-BIG-NOTHING]

Originally Posted by kevinm

You need 20% equity to qualify to cancel your PMI. You can do this at ANY TIME. Years ago, legislation was passed that your PMI was supposed to automatically be cancelled once you paid down your loan to get the 20% threshold. Before, people continued to pay for PMI eventhough they were eligible to cancel it and PMI had no interest in telling you since it was free money for them.

The only way to cancel PMI for you NOW is to refinance. You will need to get a first trust for 80% of your mortgage and a second trust for the remaining 20%. PMI is only paid to the holder of your first trust so by having a mortgage for 80% of your first mortgage, you are not required to purchase PMI.

nicely explained! thank you.

as i mentioned, i put down 10% and i've done home improvements since then.....should i do an appraisal? MUST i refi? i read somewhere that there is a 2 year minimum wait time before you can get rid of PMI. is that correct?

anyone have any personal exp. with this?

[typical guy]

Originally Posted by A-BIG-NOTHING

nicely explained! thank you.

as i mentioned, i put down 10% and i've done home improvements since then.....should i do an appraisal? MUST i refi? i read somewhere that there is a 2 year minimum wait time before you can get rid of PMI. is that correct?

anyone have any personal exp. with this?

Honestly, I'd call the bank and ask. I spoke to three different banks and got three different answers.

[Margery]

You bought the home for $375,000 with 10% down, leaving you a mortgage of $337,500. Your home would have to appraise now at approx. $422,00 for you to ask the lender to drop the PMI. Do you think it will appraise at that since you bought it in 2008? Unless you have done major work such as adding another bedroom and a full bath or a 2 car garage where there was none the value will not have gone up enough in 1 year for you to refi. But, as the previous poster noted, call your lender and ask.

[A-BIG-NOTHING]

i called Wells fargo.....

they said that my loan to value ratio is 89.9 and it'll have to be 75% before they'll get rid of PMI.

they said i have two options: pay 37k to bring down the ratio to 75% (the math makes no sense...i think he's made an error.)
OR
appraise (pay them 300 for an appraisal) and hope that it'll assess for 453k.

[kevinm]

I doubt a house purchased in 2008 will appraise HIGHER regardless of the improvements. Most appraisers will ignore anything that is NOT new structural improvements (garage, deck, bathroom, additional bedroom).