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Old 05-13-2013, 12:13 PM
 
800 posts, read 1,158,101 times
Reputation: 793

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my wife and I are under contract now with a short sale and are putting 10% down with the plan of putting the other 10% into principal with in a year of closing (will be using work bonus money). i understand that i have to pay PMI untill i am at 80% of the loan value, i have 2 questions.

1) since it a short sale and we will hopefully close, the appraisal value could actually net us more "down payment" in terms of LTV. IE, we buy the short sale for 500k with 50k down but house appraises at 600k. original equity is 10%, new equity is 25% and under the PMI requirements, can PMI be canceled at close or a month or 2 after?

2) if i pay down the loan an extra 10% as we planned to in the first year, can we cancel then? I have searched and have conflicting information that there may be a time element to this too that i cant cancel within 2 years, or 3 yaer, or 5 years.

the loan will be with wells fargo if anyone has specifically dealed with PMI and this bank.


thanks
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Old 05-13-2013, 01:02 PM
 
1,498 posts, read 3,299,155 times
Reputation: 1027
FHA loan? You might want to read this

New FHA MIP - Guidelines for Buyers
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Old 05-13-2013, 01:25 PM
 
800 posts, read 1,158,101 times
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conventional 30yr fixed loan
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Old 05-13-2013, 01:59 PM
 
Location: NJ
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Your best bet would be to call Wells Fargo directly and discuss this with them. That's what I did and they told me exactly what I owed, and when, to eliminate PMI.
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Old 05-14-2013, 05:36 AM
 
1,645 posts, read 2,502,923 times
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50k down on a 500k house? You don't have any other savings?
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Old 05-14-2013, 05:56 AM
 
Location: NJ
17,578 posts, read 43,615,453 times
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You may want to post this in the mortgage forum. But the ultimate answer is ask your mortgage company. They are the only ones that can answer you.
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Old 05-14-2013, 07:25 AM
 
800 posts, read 1,158,101 times
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i double posted in the mortgage forum as well, but this is my "home section"

we have more than the 50k in savings but do not want to buy the home and deplete any sort of saftey net. my wife and mines joint income is slighty above 200k and we have no debt except for a car payment. we dont have more savings because i just finished a masters programs that cost about 60k out of pocket in the last 2 years and i have a mother consistantly asking for loans. we are ok with the payment after 10% down but we were planning on getting rid of PMI quickly now that i have no more tuition payments ahead of us, which is the root of my original question.
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Old 05-14-2013, 12:11 PM
 
Location: West Orange, NJ
12,546 posts, read 20,201,813 times
Reputation: 3722
Quote:
Originally Posted by Penga25 View Post
my wife and I are under contract now with a short sale and are putting 10% down with the plan of putting the other 10% into principal with in a year of closing (will be using work bonus money). i understand that i have to pay PMI untill i am at 80% of the loan value, i have 2 questions.

1) since it a short sale and we will hopefully close, the appraisal value could actually net us more "down payment" in terms of LTV. IE, we buy the short sale for 500k with 50k down but house appraises at 600k. original equity is 10%, new equity is 25% and under the PMI requirements, can PMI be canceled at close or a month or 2 after?

2) if i pay down the loan an extra 10% as we planned to in the first year, can we cancel then? I have searched and have conflicting information that there may be a time element to this too that i cant cancel within 2 years, or 3 yaer, or 5 years.

the loan will be with wells fargo if anyone has specifically dealed with PMI and this bank.


thanks
FHA loans PMI cannot be canceled (you basically prepay it and it's built into the loan). Some banks have terms in their mortgage that you can't cancel PMI prior to 2 years, so just ask Wells Fargo what their terms are.

For scenario 1, you'd have to pay $300ish for an appraisal to have it cancelled. If you pay down the extra 10% (i actually think you have to get to 22% but i'm not positive), then you can request to have it canceled at that time. My bank (fifth third) requires i send a certified letter, or something like that, to formally request cancellation.
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Old 05-14-2013, 06:24 PM
 
Location: NJ
17,578 posts, read 43,615,453 times
Reputation: 16226
Quote:
Originally Posted by Penga25 View Post
i double posted in the mortgage forum as well, but this is my "home section"

we have more than the 50k in savings but do not want to buy the home and deplete any sort of saftey net. my wife and mines joint income is slighty above 200k and we have no debt except for a car payment. we dont have more savings because i just finished a masters programs that cost about 60k out of pocket in the last 2 years and i have a mother consistantly asking for loans. we are ok with the payment after 10% down but we were planning on getting rid of PMI quickly now that i have no more tuition payments ahead of us, which is the root of my original question.
If you have that kind of income and that little debt why not wait and put the money away. Shouldn't take that long.
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