Possibly dumb PMI question

[mactastic]

Quick question for those of  your with more homeowning experience than myself. Numbers are made up, but reflect the correct percentages. 

We bought our house eight months ago, and put 10% down. Due to the craziness of the market, our estimated home value is up somewhere between 12-15%, based both on Zillow/Refin estimates (I know, I know) and on comps around the neighborhood. We currently have monthly PMI that I'd love to drop if possible, but also have a bombass interest rate. I spoke to our lender about refinancing and she was unable to match our current interest rate, and the overall increase in interest/fees for refinancing didn't make sense, numbers-wise . Does anyone know if getting PMI dropped based on the estimated home value is possible without a refi, or is it based on the original loan value? And if you've had success with it, did you have to pay appraisal fees or anything like that?   

Thanks!

[statgirl]

You may be able to order a new appraisal with the mortgage company, but that appears to be company dependent. Otherwise, you need to be below 80% LTV based on original loan terms or to refinance. themortgagereports.com/55984/get-rid-of-pmi-or-mip-mortgage-insurance-with-a-refinance

[ohgillian]

There aren't dumb money questions.

When I dropped it, that was based on the original appraised value when I got the mortgage. I do think that like statgirl said you might be able to do it with a new appraisal. I would expect you'd have to pay the appraisal fee.

[Susie]

If you have a conventional loan, IME you can typically drop PMI when you reach 78% LTV, based on the original appraisal.  So if you bought a house valued at $400k with $40k down, you'd need to pay the mortgage balance down from $360k to $312k to drop PMI.  It's an extra 2% beyond what you'd have needed if you had 20% down at the time of closing.  You don't typically have to do a new appraisal, and you don't need to refi.  I haven't generally found that lenders are all that interested in seeing new appraisals to substantiate dropping PMI through increased equity vs. just paying down the loan.  I.e., I haven't seen many lenders that are willing to drop PMI primarily on the basis of the house's value having increased, and therefore your equity in it grew, or due to improvements.

If you have an FHA loan, the rules are totally different.  Those now have mortgage insurance premiums (MIP) for the life of the loan.  But it doesn't sound like that's your situation.

[mactastic]

OK, thanks all! That's kind of what I figured but thought it was worth a shot anyway. Appreciate the answers and the resources

[tripleshot]

mactastic I was able to drop PMI a few years ago by getting an appraisal through my mortgage company. I don’t remember all the details but we definitely did not refinance. I’d recommend calling your mortgage company and asking what the process is to get it removed due to an increase in market value.

[hazelden]

We did an appraisal last year to drop PMI. We bought in 2016 with 5% down, so the extra equity was almost all appreciation. We did need to reach 22% equity vs 20% to drop PMI as PP noted.

I remember wanting to get our appraisal done before the election because I was afraid house price would drop. Instead I'm pretty sure we're up to 30% equity at this point!

It's just a quick call to the lender to find out how to do it. They arrange the appraisal and charge you for it. I think our appraisal was $350.

[mactastic]

tripleshot,hazelden, Thank you so much! Calling them is getting bumped to the top of the To-Do list

[madringal]

Typically, to drop it on a current mortgage you will need them to order an appraisal and you will have to be less than 78% LTV (rather than the typical 80% for a refi or purchase).

[puppyluv]

We are in a similar place, 10% down and now 25% equity based on comps. Unfortunately, our mortgage company is Wells Fargo, one of the shadiest companies out there. I wanted to pay for a new appraisal but they said they wouldn't accept it. The only way they would let us drop the PMI was if would could provide receipts for upgrades we had done or paid off the mortgage to 80% of the original appraisal. No other options at all. It sucks but we should be there in about a year and can drop PMI then.

[AdaraMarie]

When I called about mine a few years ago the loan had to be below 78 or 80% of the purchase price so a new appraisal wouldn't change anything. Would have had to refinance.