Can I do anything about removing PMI from loan? Bank wont accept new appraisal price.?

Question

Never late w/pymnt loan 2.5yrs old. new appraisal makes Ltv is where it needs to be. Bank wont take increase in value due to improvments (add hardwood floors,finished full basement & replaced paneling w/ drywall & insulation,new 6 panel doors,oak crown molding& trim) 2 houses next door sold for 289k&186k both needed updating & 2nd had 1/2 the sqft of mine.I owe 142k.Bank only take improvements if its an inground pool,sprinkler,added room or garage. Improvements only must raise value 17k.Is this standard practice for PMI removal?Have good interest rate,hate to have to refinance. I have Excellent credit score never late on anything.

Answer 1

Get a new appraisal. Than divide the new appraisal to your current loan amount. if under 80% than refinance. Now you can take your equity in the home and buy down your rate. So lets say you had a rate of 5.5 when you purchased the house. Well guess what you can do the same but it will cost you. If you stick urself into a 30 year like I am sure you are going to do. Than spending the xtra cash on buying down the rate wont hurt you and you get away from PMI. Stay away from Helocs since they act like a credit card. Good luck!

Answer 2

Sexytrojan has exagerated the situation a little. Most residential loans are underwritten so that it is the banks perogative to remove, or not remove, the PMI on an existing loan. It is not necessarily to squeeze more money out of you, although some may use it that way. PMI is an extra layer of protection for the party carrying the note. If you want them to remove that extrra layer of protection they currently have the right to set the standards under which that could be done.
Refinance is the easiest way to get rid of it. Short of refinance, most mortgage carriers are going to make you pay down the note based on the original purchase price/appraisal.

Answer 3

The PMI company is who you need to blame. The bank just required you to protect them. No body can stop you from going to a new bank (or old bank) and refinancing based on your appraised value.

The PMI companies lose either way ( or win). They wont remove it, and they hope you take your time before paying to refinance. Why would they want to accept your appraisal, why would they want to remove it? PMI companies are operating at a loss, homeowners have several alternate option these days. Most homeowners would prefer a 2nd mortgage they can write off the interest on.

Answer 4

Unfortunately if the bank is unwilling to accept the new appraisal then you may have no choice but to refinance to eliminate the PMI. You may even be able to do some debt consolidation or take some cash out as well. Depending on the bank this can be standard practice but you would think they would not risk losing your business over it. I work with a mortgage broker and have many banks that we do business with and I may even be able to get you a better rate than they are offering you to refinance. Email me and let me see if I can give you a better refinance option. [e-mail].

Answer 5

I've seen banks be sticklers on this. It's stupid, I agree, but that's the way it is. Do you have $17k to put on the loan? That would get you where you need to be.

With your excellent credit, you may want to reconsider refinancing (I know you don't want to)...you'll probably get the PMI off the loan AND get some cash out if you need it. You'll still get a good interest rate, maybe not exactly the same but still pretty good.

Answer 6

The only way to get rid of the PMI scam is to refinance. It's underwritten that way in every mortgage so the banks will squeeze more money out of you.