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Mortgage PMI removal at or below 78%

318 58 January 17, 2018 at 12:16 PM
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Anyone a mortgage expert regarding the law for PMI to be removed when a loan is 78%.

I have exceeded this threshold and requested that PMI be removed and they have stated that I need to pay for an appraisal.

This is a conventional fixed interest rate loan.


I have read things that it is when it is "scheduled" to reach 78% and then others I read is when it actually reaches 78%



I "thought" I've read the contract a few times and perhaps I misread it, but I'll look at it later. Is anyone familiar with this situation? I don't want to pay for an appraisal if I can get out another way.

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#2
The Consumer Financial Protection Bureau has some good information here: When can I remove private mortgage insurance (PMI) from my loan? [consumerfinance.gov]

Quote :
Your lender can also require you to provide evidence (for example, an appraisal) that the value of your property hasn't declined below the original value of the home.
I think it's pretty normal for you to have to pay for the appraisal.
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Good luck. Chances are they will not remove it in any kind of timely manner. You may even need to sue them to get them to remove it. No bigger scam than PMI.
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depending on your current rate, you may just want to refi. depending on the terms, the cost may be close to what you'd pay for the appraisal.
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#5
Removing PMI is never a guarantee, and they aren't very likely to remove it without you spending some $$ for at least an appraisal.

Which is also why you should never buy a place with the assumption that "in X years we can get rid of the PMI and the payments will be so much lower!"
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Last edited by Dr. J January 17, 2018 at 03:26 PM.
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The Mortgage Insurance terms should be stated in your original loan documents which were signed at closing; and they are not universal.
Most lender's require MI to be in place for a minimum of 2 years (even if you pay down the balance faster than standard amortization and make extra payments towards principal) and there are some lenders who have the MI mandatory for 5 years no matter what.

Now, in respect to removal of MI and an appraisal is done to confirm your equity, that is always paid for by the borrower and must be ordered through a lender approved Appraisal Management Company (which is an independent third party).

However, look back at your original loan documents as there are closing documents where there is a MI rider you signed which should outline all of this. But do realize that while there are Federal Laws that are a guide there are also the closing documents that cover your specific terms and they do vary.

Finally, if you are questioning what the Customer Service Representative told you, either ask for them to send you a copy of your loan documents and instructions for their procedure to remove MI. CSR's are young and tend not to be very experienced these days and requests for instructions in writing is always a good thing in matters like this.
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-Adam
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#7
Quote from tiedyed1
:
The Mortgage Insurance terms should be stated in your original loan documents which were signed at closing; and they are not universal.
Most lender's require MI to be in place for a minimum of 2 years (even if you pay down the balance faster than standard amortization and make extra payments towards principal) and there are some lenders who have the MI mandatory for 5 years no matter what.

Now, in respect to removal of MI and an appraisal is done to confirm your equity, that is always paid for by the borrower and must be ordered through a lender approved Appraisal Management Company (which is an independent third party).

However, look back at your original loan documents as there are closing documents where there is a MI rider you signed which should outline all of this. But do realize that while there are Federal Laws that are a guide there are also the closing documents that cover your specific terms and they do vary.

Finally, if you are questioning what the Customer Service Representative told you, either ask for them to send you a copy of your loan documents and instructions for their procedure to remove MI. CSR's are young and tend not to be very experienced these days and requests for instructions in writing is always a good thing in matters like this.
Thanks. Yeah it is mandatory for 5 years, but luckily I'm past that requirement. The original loan officer I dealt with before retired and the new one isn't as informative, but they still get back eventually. I think I'm the first that they are doing this for.

I reviewed the documentation and it had a scheduled date for it to be automatically removed in 2 years based on the original amortization schedule.. Pretty much follows the federal law.

I am going to pay to get an appraisal. If it comes back good then it will drop off, if not then I will know the value needed to be at to see if I want to pay it down or wait for the scheduled date.

Refinancing is a hard choice since the fix rate is 3.325% and I don't think I can get that today. I will update with the results of this process as it goes through the appraisal process now.
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Quote from johnfoe
:
Thanks. Yeah it is mandatory for 5 years, but luckily I'm past that requirement. The original loan officer I dealt with before retired and the new one isn't as informative, but they still get back eventually. I think I'm the first that they are doing this for.

I reviewed the documentation and it had a scheduled date for it to be automatically removed in 2 years based on the original amortization schedule.. Pretty much follows the federal law.

I am going to pay to get an appraisal. If it comes back good then it will drop off, if not then I will know the value needed to be at to see if I want to pay it down or wait for the scheduled date.

Refinancing is a hard choice since the fix rate is 3.325% and I don't think I can get that today. I will update with the results of this process as it goes through the appraisal process now.
You almost 100% will need to use the appraiser that the bank assigns. They will NOT accept your appraisal. And needless to say, their appraiser will appraise low in order to keep PMI on the loan.
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