How do I get rid of Wells Fargo PMI?

Question

I know the default answer of getting 20% equity. My question actually refers to getting Wells Fargo to adjust the value of your home. My house was under valued when I closed the loan and home values have been going up in my area. However, Wells Fargo does not really give much help on the subject of reappraisals for your home. In fact I think they like PMI. Does anyone have experience dealing with Wells Fargo on this issue? Or perhaps does anyone know if Wells Fargo is required to allow the reappraisal or what rights I may have on this issue?

Answer 1

I am a real estate appraiser and have some experience in this area. I do not have specific experience with Wells Fargo so another person may have to assist you with that but, I can tell you that I guarantee you that Wells Fargo has a procedure for removing PMI. You just have to dog them relentlessly to get to the right person who can help and send you the forms. You already know that you have to show 20% equity (some lenders have even made it 25%!) and get an appraisal to prove it. The government has enacted new laws in the last few years to make it easier for consumers to challenge PMI removal. Mostly these were addressed at FHA insured loans but some have been made towards conventionally financed loans. So, you just mave to be diligent and let them transfer you around and around until you finally get to the right division of Wells and you will succeed. Of course you always have another option-refinance your loan. Yes, you are going to incur some new loan fees in doing a refi but you will likely save in the long run the longer that you keep the new loan. A refi will re-establish a new loan to value ratio and if you have the 20% equity, your new loan will not be subject to PMI.

Answer 2

PMI, or private mortgage insurance, pays for an insurance policy that covers the lender in case you default on the property.

To get out of PMI without refinancing, you have to submit a request in writing with a recent appraisal by a company that is approved by Wells Fargo. Unlike refinancing when you only need 20% equity, to drop PMI you need 25% equity.

Here's an aricle on this subject:

http://www.kiplinger.com/columns/ask/archive/2006/q0216.htm

Answer 3

Of course they like PMI. It insures them something if you default on your loan. Having your house reappraised isn't going to do anything until you refinance. You should call a mortgage broker and talk to them about your option. Be refinancing you can pull more money out of your higher valued house, get rid of the PMI, etc.

I don't think it's just Wells Fargo, it's all mortgage companies. You could also refi 100% of your loan, just as 80% and 20%. That will get rid of the PMI and most likely lower your payment.

Answer 4

This Site Might Help You.

RE:
How do I get rid of Wells Fargo PMI?
I know the default answer of getting 20% equity. My question actually refers to getting Wells Fargo to adjust the value of your home. My house was under valued when I closed the loan and home values have been going up in my area. However, Wells Fargo does not really give much help on the subject...

Answer 5

Wells Fargo Mortgage Insurance

Answer 6

First, start with your appraisal district's web site or your own tax bill. If the district appraises your home and it's worth the 20% extra that you need then you need to address the issue with Wells Fargo legal department. If you don't get the results you want, tell them you are going to be refinancing with another company. That should light a fire under their PMI. Rates are still pretty low right now and you would probably do well to refinance anyway.

Answer 7

If you go to www.PrivateMI.com, you will find the steps necessary and laws governing cancelation of MI. This is the web site for a group called Mortgage Companies of America, which is a trade group of most of the MI companies. But the instructions are very straight forward and not written from the angle that they want you to keep your coverage. It's actually written from the angle of how you should discuss this with your lender when your lender is apprehensive about you getting rid of MI.

But even if you do not get rid of the MI, refinancing might get you a lower MI rate and tax deductibility. When you got your loan, let's say the LTV was 100%. Your coverage would have been 35%. If you refinance now, and your LTV is, let's say, 85%, your coverage would be 12%. This would significantly lower the premium. Plus, for loans closed in 2007, there is now tax deductibility qualification. This is new. So your MI payment could now be tax deductible if you refinanced.

Another poster indicated MI is no longer usually required. Nothing could be farther from the truth. When the lender tells you there is no MI, the truth is your lender has purchased coverage on its own. This is erroneously called lender-paid MI, but it is really paid for by the consumer by adding an eight to a quarter to the loan rate. With regular MI, you pay as long as you need the coverage. With the "no-MI" program, you will pay the increased loan rate for the life of the loan.

The truth is virtually all loans over 80% LTV have some coverage. Same holds true for a second mortgage that pushes the Combined Loan to Value over 80%. Without mortgage insurance, the loans cannot be sold in the secondary market. But telling the customer there is no MI makes the customer feel good, so the lender rolls it into the rate.

If you refi, have the lender quote you with monthly MI, with lender-paid MI (if you want to say no MI, that's ok), and with financed MI. (This means you pay the entire premium up front and roll it into your loan. This is usually the cheapest option of all.) Then take tax deductibility into account and decide which loan works best for you. But if you approach refinancing with the attitude of "No MI no matter what," then you run the risk of overpaying for your loan.

Good luck.

Answer 8

I also have Wells Fargo for a duplex I bought and asked them the same question. They told me that pmi would automatically go away once we had 20% equity, which it didn't. I ended up taking a home equity loan so now I am stuck with it anyway. I agree they are very vague on the subject.

Answer 9

The bank should be willing to do a reviewal of the loan and determine if the PMI is still needed. It is not uncommon. Unfortunately, when you are dealing with the major banks...it is some $8 hour employee that will be trying to answer your question and forget them stepping out of the box to help. Call the number on the mortgage statement and ask them about the process. If you do not get the answers from the bank you should consider refinancing.

Here is some additional info. Hope this helps.

Answer 10

You need to double check what your mortgage documents say regarding PMI. The loan my next door neighbor has on his house specifically says that he cannot get rid of PMI just by having the house increase in value because the real estate market goes up. He either needs to put improvements on the house to increase in value, or he needs to pay down his mortgage.

At the very least, you would need a re-appraisal of the property and it is something you must pay for.