Removing PMI Insurance

[Carlos Hathcock]

Hope there might be a couple mortgage gurus on here that can answer. We bought the property next door as a rental investment. Now that my timber consultant came back with more favorable numbers than anticipated, we want to pay the principal down to less than 80% do drop the PMI. I inquired and PennyMAC said they would need a new appraisal, even though it was appraised only months ago, and we had to use THEIR appraiser. I was happy about neither of these statements, but I guess I understand the first one, and agree just slightly with the second. When I inquired as to the cost this was their response.

"The appraisal amount can range between $400-$1000. We would not have the actual cost for your specific loan until billed by the appraisal company."

Thank you, LaToya

I emailed them back and told them this was a horseshit proposition. The last inspector charged around $ 400-500 but a grand? Not to mention they can't give me a number until the appraisal company gives them a bill? Gee, I wonder what that number would be. I asked how they felt if a roofer came to their house and quoted them a price of $ 4,000-10,000 but wouldn't know for sure until the job was finished. Guess they didn't like that. Their response was:

"Once the loan to value is at 80 percent you can request we order an appraisal. Until that has taken place we are unable to do anything with removing the PMI."

Chad

So if I understand the law correctly, once the principal is paid down to 80% they HAVE to remove the PMI. My question is don't they have to remove it if I pay it down ahead of schedule? Can they refuse to remove the PMI if I do? Can I request another bank service the mortgage? My mortgage got sold to PennyMAC a month after it closed. Any suggestions / advice?

 

[gun_slinger_boy]

Very good question as I have the same idiots as my mortgage holder. My mortgage was sold to them only weeks after closing. They tried to pull a fast one on my very first payment to them. I'll be curious to see what others have to say.

 

[Celt]

Great topic, i recently asked our mortgage guy and he told me something crazy that makes it seem like ill never get rid of it. Been paying close to 300/month for about 10 yrs now. Im sick of pmi

 

[gun_slinger_boy]

How to Get Rid of PMI: Tips to Ditch Private Mortgage Insurance Fast

According to this if you get it down to 78% of your original principal and it's not FHA they are required by law to remove it.

 

[Carlos Hathcock]

That's what I understood as well. However, this is not going down over the normal course if mortgage payments so they'd loose a pretty penny in PMI insurance....which I'm guessing is why they don't want me to do this.

 

[kev74]

Read through the mortgage paperwork. It should be spelled out in there.

When I was in my old house, they didn't give us any trouble getting rid of PMI once we paid 20% of the principal. That was almost 15 years ago now though.

 

[gun_slinger_boy]

That's what I understood as well. However, this is not going down over the normal course if mortgage payments so they'd loose a pretty penny in PMI insurance....which I'm guessing is why they don't want me to do this.

Of course. They want everyone to pay the minimum payment for the entire life of the loan. But tough shit. Take them to court if necessary.

 

[masterswimmer]

The reason the bank requires a new appraisal even though the loan is only months old is because home values do change. Your mortgage amount must be 78% or below the appraised value, not the purchase price. Be aware that values could have increased in the short time you've had the home and thusly your lump sum payment to reduce the outstanding balance to 78% might even be less than you think.

As for how much the appraisal will cost, you should POLITELY escalate this issue to a supervisor or higher as the fee should not be arbitrary.

 

[MikeM]

I did a refi and heloc at the same time 2 years ago. Due to a paperwork snafu the refi was ready but the heloc wasn't so I did refi and then the heloc was scheduled for exactly one money latter. During that month the banks underwriter ordered a new appraisal. First appraisal was for 500 k and the 2 loans combined was 300k. No way a house value could drop that much. But I didn't care since the bank was eating all fees for the heloc.

I love how banks pursue accountants because they want you to steer them clients and then screw up what they are doing for you. Not only did I have to stay home for a second appraisal but had to go to a second closing during tax season. I wound up with a good low rate with no costs (not even rolled into loan ) But I never recommended that broker to anyone.

 

[Doc8404]

Thank God for VA loans...no PMI

 

[Marine Cpl]

Thank God for VA loans...no PMI

I used a USDA loan. No PMI as well.

 

[Joe Blow]

You should ask the lender what appraisal companies they use. Most all don't rely on just one company, they have a bunch that they use. This is quite likely why they are telling you the cost will be anywhere from $400 - $1k. Companies charge different rates (just like FFL's for transfers) and they don't know which company might end up doing your appraisal. Ask for what companies are on their "approved" list and shop from there. As long as you use one of their approved appraisers you can do that end yourself. Make sure to ask the lender how long is the appraisal good for. If you were to be appraised today they aren't going to accept the appraisal months down the road due to real estate market changes.

 

[GOPerfect]

After about eight years of paying PMI, we refinanced the loan and it went away. The ratio of value to owned changed. Besides that, I got nuttin.

 

[speedkills27]

"I used a USDA loan. No PMI as well."

ditto

 

[hooked]

I took a 401k loan to not have PMI..

 

[Saltwater60]

As far as I know it’s a law that if your below 80% of what your home appraised at they need to drop PMI if you request it.

My story I got to below 80% and had my wife call the bank they said no we can’t because blah, blah, blah. I said we meet the qualifications. My wife had no clue what I was talking about. I called the bank and told them what was what. They said your right we will remove it immediately. Get to where the law says you need to be then call them. They refuse tell them you’ll call the attorney general on them. They will drop it.

 

[Redshirt]

I recently went through this. They only have to remove it on their own if you pay down to 78% according to the normal schedule. If you prepay they don’t automatically remove the PMI. We had to get an appraisal done, and it cost $350. First we paid off down below 78%.

 

[MikeM]

If your loan is old enough to have paid down 20% you should probably refi due to lower rates now anyway.

 

[Carlos Hathcock]

If your loan is old enough to have paid down 20% you should probably refi due to lower rates now anyway.

Just closed in December 2017.

 

[Saltwater60]

There is no time frame as far as I know. You pay it down to a certain amount and your good.

https://www.google.com/amp/foxbusiness.com/features/how-to-dump-pmi-asap.amp

 

[Carlos Hathcock]

My understanding is there is law behind being able to do this, and I think I found it but I can't quite make sense of it, from a legal jargin standpoint. The article had this statement:

'If you can't persuade your lender to drop mortgage insurance..."

Why shod they need persuasion? There's law and rules to this. I just want to be able to produce the right information to make my case.

 

[Aardvarkjff]

Do you know how close to the 80% you are at this very moment? The banks started with their appraisal in 2017 and a loan amount and that give the Loan to Value (LtV). It is my understanding that if the current balance on the loan to the original appraisal is 80% you can ask them to remove it. However, if it drips to 78% it is supposed to come off automatically. Depends on how close you are if it is worth it given the costs and time involved. Next I would check your load docs, there should be a listed fee for the appraisal. That fee should not change in only a few months. It would be a set service on a known property.

 

[Carlos Hathcock]

They already gave me a dollar figure and I know exactly the principal balance. As far as values changing, I guess I get it so I was willing to do the appraisal, just not for a grand. This mortgage was sold by the local broker in about a month after closing so since Penny Mac is national, there's a good chance they don't use the same appraiser even though he was just out a few months ago. They turned into dicks when I called them out on their horseshit appraisal quote. So now they won't order an appraisal until the value is to 80% so even if I pay it down, they could still come asking for more depending on the appraiser.....which is hired by them.

 

[Joe Blow]

Just closed in December 2017.

So why no PMI removal at refi?

 

[Carlos Hathcock]

So why no PMI removal at refi?

I didn't refi, I bought as a rental and as an investment property and so the downpayment is higher. We didn't want to go far enough to negate PMI as it would touch funds we keep in reserve. Once the timber gets harvested, I can replenish the funds we used for the downpayment and get rid of PMI, which adds up when you do the math.

 

[Joe Blow]

OK... The property was appraised upon your purchase. The LTV ratio dictated that PMI was / is charged by the lender. You need to pay the loan down to remove PMI. Just because your timber consultant came back with better numbers is not going to satisfy the lender. You need a new appraisal to meet the LTV ratio. See previous posts...

 

[Carlos Hathcock]

I didn't understand that but I have a hard time swallowing shelling out an extra 500 above reasonable rate just so I can send them a big wad of money.