Q about Removing PMI

[laurensmomma]

I recently bought a house, about 18 months ago. I have PMI on my loan, and even though I know I'm not that close to being able to get rid of it, I want to know my options.

I was just reading online that for FHA loans, many companies make you pay PMI for a minimum of 5 years plus having the 20% equity, and that refinancing may be the best option in these cases if you reach that second threshold early.

I got a rate of 3.25%, and I read somewhere in one of these threads that refinancing is only worth that cost if you lower your interest rate by at least 1%. Is that true? If so, I highly doubt I would ever get a rate of 2.25%.

Thoughts? Recommendations?

[ladyk]

FHA loans now require you to carry the PMI for the life of the loan but it was in the last year of so that said rule came out. (it only applies to loans originated after said rule came into play) What kind of loan do you have now?

[laurensmomma]

Sept 30, 2014 12:50:49 GMT -5 ladyk said:

FHA loans now require you to carry the PMI for the life of the loan but it was in the last year of so that said rule came out. (it only applies to loans originated after said rule came into play) What kind of loan do you have now?

Other than FHA, I don't know what you mean by what kind of loan do I have.

I do know that I was able to close on my loan like a month or so before that new rule went into place. Whew! So I should be able to get rid of it at some point.

[toesie]

With FHA, you can't remove PMI earlier thatn 5 years/20% requirements except for refinancing.

[simpsongal]

I think you need to do the math and a cost benefit analysis. It's not necessary an easy, straighforward answer.

We had an FHA loan and were paying almost $650/mo in PMI. We put money into our house and refinanced in 6 months, dropping the PMI (the interest rate actually went from 3.875 to 3.5). The closing costs were pretty high, like $8000?

Look at the month to month cost savings, the cost to refi. I don't recall, after 5 years, do you have to refi the FHA loan to drop the PMI or will they do it with just an appraisal. Maybe talk to a mortgage broker.

[laurensmomma]

Sept 30, 2014 13:14:35 GMT -5 simpsongal said:

I think you need to do the math and a cost benefit analysis. It's not necessary an easy, straighforward answer.

We had an FHA loan and were paying almost $650/mo in PMI. We put money into our house and refinanced in 6 months, dropping the PMI (the interest rate actually went from 3.875 to 3.5). The closing costs were pretty high, like $8000?

Look at the month to month cost savings, the cost to refi. I don't recall, after 5 years, do you have to refi the FHA loan to drop the PMI or will they do it with just an appraisal. Maybe talk to a mortgage broker.

This is helpful,  thank you.

[thatgirl2478]

read your mortgage paperwork.

when we tried to remove PMI with our conventional loan via Citibank, we were told that we could do it one of 3 ways:

- pay for an appraisal to see if we were at 80% current value (we weren't)
- refinance and make sure we were below 80% LTV (no way this would happen)
- wait until the original amortization schedule would have our original loan at 78%

We were told when we took out the loan that when our loan hit 78% LTV the PMI would drop, however that 'as scheduled per the original amortization schedule' part was left out ... pretty sneaky IMO. We had paid a significant amount into the principle in hopes of dropping that PMI only to find out that it didn't matter.

[megstoo]

I have an FHA loan. We bought our house in 2010 and our loan is through BoA. I was told from our loan officer that I can either A) request PMI to be removed at the 5 year mark or B) I can refinance my house and bring the excess money to the closing table.

Since refinancing isn't an option we have 8 more months to go and then I can request PMI get dropped.

As far as the PP mentioning carrying PMI the entire life of the loan - I haven't heard that but you might want to call your lender to find out.

[ladyk]

laurensmomma  If you got in before the rule change, then the other posters are correct in when you can get the PMI off. 5 year minimum, then you have to hit 80% LTV and get it reappraised or wait till it hits 78% LTV and it will automatically drop.

As for not refinancing for less than 1% drop in your rate, you'll have the run the numbers for the closing costs, the dropping of the PMI and what your payment will look like.

[asoctoberfalls]

Sept 30, 2014 13:21:53 GMT -5 thatgirl2478 said:

read your mortgage paperwork.

when we tried to remove PMI with our conventional loan via Citibank, we were told that we could do it one of 3 ways:

- pay for an appraisal to see if we were at 80% current value (we weren't)
- refinance and make sure we were below 80% LTV (no way this would happen)
- wait until the original amortization schedule would have our original loan at 78%

We were told when we took out the loan that when our loan hit 78% LTV the PMI would drop, however that 'as scheduled per the original amortization schedule' part was left out ... pretty sneaky IMO. We had paid a significant amount into the principle in hopes of dropping that PMI only to find out that it didn't matter.

Yikes! We are buying a house and are planning to pay it down to drop PMI ASAP. I hope we don't have a clause like this! Thanks for the head's up - I will have to pay attention!