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    pmi

    i just paid down my mtg to below the 80% mark and have been paying pmi for the past 4 yrs. we brought our house with zero down so i think weve done alright to get to this point. my question is is now that i have 20% of the mtg paid off how and when do i get rid of the pmi insurance. we currently pay about 40 bucks a month for this so the sooner it comes off the better as far as i am concerned. 1. So do i need to call them and tell them that i now have 20% paid off. 2. does it drop off automatically since i believe i am below the point of paying pmi or 3. something else. if anyone can tell me or has advice on how to get rid of it then plz let me know. also if i am completly missing this and i have completly the wrong idea plz also let me know. thx for all ur guys help. much appreciated

    #2
    On my last mortage, my bank stated that it would drop off at 78% automatically. However, usually, you have the option of paying for an appraisal to determine the value of your home in comparison to the loan balance. You need to contact the mortgage company to initiate this.

    Because you have paid it down so quickly, I think I might look at paying it down to the percentage that your mortgage company states so that it will fall off. This is most likely stated in your mortgage loan documents that you signed 4 years ago.

    Best bet...call the mortgage company. They will give you the exact answers you are looking for.

    Congrats on paying your mortgage down so quickly!
    My other blog is Your Organized Friend.

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      #3
      It really depends.

      I had a call and get an apprasial from the mortgage company for them to drop the pmi since it was based more on home inflation than actual % paid off.

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        #4
        I was thinking about this the other day.

        If lender's require PMI to protect them from defaulting borrowers, shouldn't that have absorbed some of the toxic debt that has crippled the economy? I mean, clearly, it didn't work . . .so nobody should have to pay it, right? (obviously not going to happen, just pointing it out)

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          #5
          I would call them and inform them you are below 80% of the mortgage. It never hurts to prod them.

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            #6
            Call and ask. It varies by type of loan. I can tell you from experience that if you have an FHA loan, you have to pay it down to 78% and pay the premiums for a minimum of 60 months before they can be dropped. Though we were told it would drop automatically on our FHA loan, it did not and it turned into a year long hassle involving the mortgage company, HUD, and a lot of people who had no clue what was going on.

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              #7
              Call and ask or check out their website. On my home loan's account page on their website, there is a link to request PMI be dropped and they will evaluate it for you. I agree with PPs that you may need to pay for an appraisal.

              P.S. I WISH my PMI wa sonly $40! Mine is $100!??

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                #8
                Starting in 1999 insurance companies are required to automatically cancel your PMI once you own at least 22% of your home, based on the original purchase price.

                So if you pay off about 22% of the mortgage and still if PMi continues then you can contact them to get rid off it.

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                  #9
                  The bank will most likely require an appraisal as the value of your home has changed over the last four years. While you might owe less the 80% of your original loan it might not appraise for the amount of the original loan in this market. Appraisals have been a lot of the problems with today's market and selling homes.

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                    #10
                    Even i too had been with such issue. So to resolve my problem, i consulted mortgage company. And they provided the solution. So i request you to consult with your Mortgage company because the policy varies from place to place. I am sure you issue will be resolved.

                    Regards,
                    Conan
                    kotaksecurities.com

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                      #11
                      so i spoke to the mtg co over the weekend and they told me that i need to be below 78% and have been paying pmi for 5 yrs minimum. so basically i feel like i am almost being penalized for paying down my mortgage faster. what i mean by that is i have paid down my mtg by 20% in 4 yrs. if i would have paid the 20% upfront then i would not have had to pay this. so i basically think this is a bunch of bs. Now i am stuck paying the pmi for the next year even tho i am below the threshold. its only 36 bucks a month but 36 bucks is 36 bucks and i could be using this towards the principal.

                      so plan b was to refinance. the problem being its going to cost me 1700 bucks to do this and over the long haul i dont think that i am going to recoup this money since i plan on aggressively paying this mtg then once it is paid off use the equity to move to a bigger house (hopefully 4 yrs). Does anyone else know of a way of getting out of paying this pmi? it now seems like i am paying it for nothing.

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                        #12
                        The terms of your mortgage are set and has been described to you:

                        $432 PMI for one more year beats the $1700 to refinance.

                        Instead of looking at it as being "penalized," why not just chalk it up to the price of buying a house with no money down? You've done other things with the money you would have used for a down payment -- hopefully you've gained more than lost.

                        $432 / year is not a whole lot of dollars in the whole scheme of things.

                        In the short and long run, you've done a whole lot better than the vast majority of people who have saved nothing and have little equity or negative equity now.

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                          #13
                          I agree with Seeker- don't think of it as being penalized, think of it as finishing paying off the premium for an insurance policy that allowed you to buy a house with less than 20% down.

                          Furthermore, consider how much interest you have already saved by prepaying as much as you have- my guess is that it's a lot more than $432

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                            #14
                            Some loan programs require the PMI to be paid over the entire life of the loan regardless what percentage is left on the balance.

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