what is criterea to get rid of pmi with conventional and fha mortgages?

Answer 1

PMI is a useless fee you pay to the mortgage company if you do not have at least 20% in equity in the home on the initial purchase date.

- You can get around paying PMI by getting a loan for 80% of the value and getting another loan to cover the 20% less your down payment. This is what most people do if they don not have 20% to put down on a home.

- If you already have a house and paying PMI you have to wait unitl at least 20% of the loan is paid off (assuming you financed 100% in one loan). Pres. Clinton signed a bill that made it illegal for mortgage companies to charge PMI once 20% of the ORIGINAL loan amount had been paid (Assuming 100% was financed).

Many people think that once their house appreciates and they obtain 20% in equity from paying off principal and appreciation, that they should stop paying for PMI. The better mortgage companies will stop the PMI sometimes before 20% of the loan is paid, but most won't. A good mortgage agent will set up the loan to help you avoid PMI but there are some sharks out there.

*** Bottom Line ***

2 Choices to get out of PMI-

1. Pay 20% of the original loan value

2. Refinance the entire loan and make sure the main lona does not exceed 80% of the appraised value

Answer 2

An FHA mortgate does not have PMI. The mortgate insurance premium is rolled into the total loan abount. If the loan is paid off within about 5 years or so you may get a partial refund of the unearned premium.

A conventional loan requires an 80% loan to value ratio to avoid PMI. If you put down less than 20%, your lender will include a statement that will tell you when the PMI will no longer be required -- when the LTV is below 80% based on the amortization schedule. You can ask for PMI to be dropped before then if you can prove that the home's value has increased enough to get the LTV below 80%. Most lenders require you to have 2 - 3 years of on-time payments before they will consider an application to remove PMI.

Answer 3

Equity of at least 20%, i.e. the principal balance has to be less than 80% of the appraised value.

This requires you either pay down your principal balance or an appreciation of your home. If you think the FMV has increased enough to put you under 80% you can request the mortgage company to re-appraise your property, but I believe you have to pay for the appraisal.

Once you have 22% equity, the bank will automatically drop the insurance.

Answer 4

Generally you need to completely refinance your home loan. Some say there is another way, but I've never seen it.

If you're planning to stay a while it's usually worth it. Note, it may cost up to $3000 to refinance. If you're lucky, you can get it done for free and keep the same rate. This will depend on your current mortgage rate and lender/bank and your new mortgage broker/banker. Make sure you pick an HONEST one!

If you're planning to sell soon (within 24 months), it's not worth the expense.

Answer 5

You need to either put 20% down or get subordinant financing at the time of origination to avoid PMI. After origination you can request to have your PMI removed after you have 20% equity in your home. Or else it will fall off automatically once you have 22% equity in your home.

Answer 6

You can also refinance at 80% of the value and the rest home equity loan if you are far from paying down to 80%.

Answer 7

I think you can drop your pmi once you get over 20% equity built into your home.

Answer 8

You need 20% down.