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- Conventional loan
- 5% down
- Fannie Mae/Freddie Mac backed
- in Texas
- Short Sale (with 25% instant equity based on appraisal)
My understanding is, I have to pay PMI because Im only paying 5% down of the purchase price. The appraisal of the property came in ~25% higher than the purchase price, so its in my best interest to cancel PMI as soon as possible.
The question is, how soon after I close can I request to cancel PMI? The one requirement that is consistent across the board is the 78% LTV, which will be there at closing. Whats not clear is the timeframe. Can I request after 1 month? I have called PMI company, several lending institutions, and Fannie Mae/Freddie Mac directly (horrible) to try to get some answers. I hear several different answers regarding "payment history", 2yr, 1yr, 6mos, and no min, all from the same lender!
Being that I dont want to do a cash out refi, I just want to cancel PMI, I figured it wouldnt be a problem to request it right away. Has anyone been in a similar situation and have been able to cancel PMI shortly after closing? Using Fannie Mae/Freddie Mac backed loans? Thanks for the help.
My current mortgage was 100% financed and we just paid down to 77% LTV which removed the PMI. According to our lender (Wells Fargo, Fannie Mae backed) the requirements to cancel were 78% LTV, no payments more than 30 days late in the last year and no payments more than 60 days late in the last two years.
The late payment clause may be what is causing the confusion. Since you don't have the payment history to see if you'll pay on time they may require you to keep the PMI for up to 2 years to satisfy that requirement. Of course you won't know until you ask and asking is free so you might as well request the cancellation and see what they tell you.
- Conventional loan
- 5% down
- Fannie Mae/Freddie Mac backed
- in Texas
- Short Sale (with 25% instant equity based on appraisal)
My understanding is, I have to pay PMI because Im only paying 5% down of the purchase price. The appraisal of the property came in ~25% higher than the purchase price, so its in my best interest to cancel PMI as soon as possible.
The question is, how soon after I close can I request to cancel PMI? The one requirement that is consistent across the board is the 78% LTV, which will be there at closing. Whats not clear is the timeframe. Can I request after 1 month? I have called PMI company, several lending institutions, and Fannie Mae/Freddie Mac directly (horrible) to try to get some answers. I hear several different answers regarding "payment history", 2yr, 1yr, 6mos, and no min, all from the same lender!
Being that I dont want to do a cash out refi, I just want to cancel PMI, I figured it wouldnt be a problem to request it right away. Has anyone been in a similar situation and have been able to cancel PMI shortly after closing? Using Fannie Mae/Freddie Mac backed loans? Thanks for the help.
Let us know how this works out for you...why not just ask for the difference in cash at closing?
The late payment clause may be what is causing the confusion. Since you don't have the payment history to see if you'll pay on time they may require you to keep the PMI for up to 2 years to satisfy that requirement. Of course you won't know until you ask and asking is free so you might as well request the cancellation and see what they tell you.
Yes, the payment history question is the confusion. One lender told me since I wont be asking for cash out refi, only to drop PMI, the payment history doesnt matter and I can cancel after 1 month. Another said, yes there is a 2 yr history unless you request a BPO, but she didnt know anything beyond that. Another said you can waive the 2 yr history if improvements are done and shown on tax record. Another said, 6 months, while her office neighbor said 2 yrs NO MATTER WHAT. If you call back any of the lenders and speak with another agent, you get a totally different answer, doesnt matter what dept or whether its jr or sr staff.
Doing a search reveals all sorts of nightmares regarding PMI, especially with lenders not wanting to cancel, even after the 2yr req and good payment history. (like GMAC) It just seems impossible to get any sort of clarification on this, and Id like to because paying 1 month vs 24 is a $5k+ difference.
Re: Asking for the difference in cash at closing? I dont follow.
That was sarcasm and I believe it was intended to say you're stuck with the PMI. As I said above, the only way you're going to know is to put in the request and see if it's accepted. I don't think it will be. Too many people are defaulting for them to take a chance on dropping PMI when there's no payment history to indicate whether you're a good risk or not. From their POV you're already a bad risk with only 5% down.
I hear ya. I definitely plan on asking to remove PMI 1) at closing and 2) 1 month after closing 3) 6 months after closing, etc.. With the shear number of short sales on the market I figured someone might have gone through this already and might offer their experience of dropping PMI shortly after purchasing an "instant equity" deal. Anyone?
Id like to report that I have successfully been able to drop PMI after 1 yr! After doing some 'significant' repairs, ordering a new appraisal, meeting the 78% LTV and simply asking to have it dropped, I was able to do so. If the repairs had not been deemed significant, I would have had to wait the 2 yr timeframe as many had previously mentioned. The repairs included some stucco/framework issues and some chimney work. Thats it, just wanted to followup on the original post. Thanks for the input everyone.
Wow, this is pretty cool news indeed. Always good to hear stories like this. Gives the rest of us hope.
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