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Any loan having more than 80% LTV requires PMI. How soon after closing can you cancel PMI? I just heard today that you might be required to keep if for minimum period of time, even if you hit the 80% mark of the loan (not of market value from a new appraisal, but of original loan value) before a year is up. What if you hit the required 78% LTV in less than a year? Does the lender still have to drop the PMI regardless of the time the loan has been in existence?
Well the biggest thing to get in mind right now is the current market that we are in... your appraised value might have gone DOWN since you purchased your home and THAT is what the MI is based off of. In order to try to get your MI off you would new a new appraisal and than you would have to try and get it approved with the MI company that you are with. With most areas now considered "declining market" you most likely will not be able to get it off just yet...sorry. I could be incorrect but I have been underwriting and processing mortgages for 11 years so I am pretty sure.
Well the biggest thing to get in mind right now is the current market that we are in... your appraised value might have gone DOWN since you purchased your home and THAT is what the MI is based off of. In order to try to get your MI off you would new a new appraisal and than you would have to try and get it approved with the MI company that you are with. With most areas now considered "declining market" you most likely will not be able to get it off just yet...sorry. I could be incorrect but I have been underwriting and processing mortgages for 11 years so I am pretty sure.
The OP is not using an appraisal to get rid of the PMI. He is paying the loan down. On a conventional deal, I beleive they have to drop it at once you pay down the loan to 78% of the sales price no matter how long it has been.
Once you have it paid down to 78% of original sales price, contact the lender and tell them they should be removing the PMI.
Yes, we will be paying it down. So, from what you're saying, 78% seems mandatory regardless of time, but 80% is up to the lender.
Mentioning an appraisal brings up another question. How long is the original appraisal valid before it "expires?" For example, if appraisal values are supposed to be valid for a company to use for 3 months, and you reach 80% in three months, can you use the appraisal from the original sale as your proof that the home is 80% LTV? We'd like to wait until we have 20% down, but the seller cannot wait. But, we should be able to get to 80% down quickly after closing. Should get to 78% down easily, also.
Hi weartoomany, here is a link for a HUD website page with good (and correct) information re PMI and the PMI Act that dictates the rules on this subject. Hope this helps!
HUD PMI Act Information (http://www.hud.gov/offices/hsg/sfh/res/respapmi.cfm - broken link)
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