Can I get rid of Private Mortgate Insurance now?

Question

Hi. We bought our house in 99 for $145 k. We then refinanced and took out a loan in 03 - so our new loan balance was $210k. Our current balance on the house is about $198k. We're still paying a hundred and something dollars for PMI. I'm not so great at this stuff and I read that you'd have to meet a 20% loan to value on your loan to be able to get rid of PMI. We checked the value of our home just online, and it is a supposed $522k, i doubt that is accurate. The two homes right beside us have sold in the last couple of years for over $400k for sure.

I would really love to stop paying PMI but I'm wondering if we are even eligible. I could call and ask, but before I do, I'd love to know if we are even close to that 20% LTV. Wells Fargo won't just tell you, they have to have an appraisal done by them for $150 whether or not the result is PMI removal or not.

Thank you much to all who respond and help!

Answer 1

I would say that it would be well worth it for you to have the appraisal done. Even if your house isn't valued at $522k, even $300k value would give you 20% equity based on a loan of $198k. For a loan of 198k your house would have to be worth about $250,000 for you to have 20% equity in it.

Answer 2

You will need an appraisal regardless as all lenders require that for value. For $150 the lender is going to run an automated value and will probably come very close to the $522k amount, 80% of which is $417600 so you would be well below the amount needed to remove the PMI. Your best bet is to get a full apraisal, should cost in the neighborhood of $350. Provide that and the request to remove PMI and you should be in the clear. However, I don't understand if you refinanced in '03 why are you still paying PMI? Unless you did a 100% refi, which if you did your broker stuck it to you to make more money. Feel free to contact me if you would like further advice.

Answer 3

In the loan documents from 2003 it will say what you have to do to get rid of the PMI. It will have specific instructions. If your home is worth more than $250,000 (and you seem to believe it is worth at least $400,000) then you shouldn't have a problem.

You usually have to prove that with an appraisal. They may require your value to show a 25% equity, you will have to look at that part of the loan documents carefully.

Wells Fargo does not have anything that shows them you have any equity in the current market. Without an appraisal you would have to want until you have paid off a huge part of your loan balance. If this PMI is costing you a couple of hundred a year or more this sounds like an obvious decision.

The online things that claim to give you a value can't be accurate but they shouldn't be more than 25% off the right value. So you should be OK.

Answer 4

Your are smart to attempt to remove PMI from your loan. You mention that you owe $210 and homes are selling at $400K. Your home only needs to appraise at $280K (or slightly less- depends on closing costs) to be at 80%. Since you are already paying 100+ for PMI, it surprises me that you wouldn't want to pay $150 for an appraisal that Wells would do for you. Basically pay $150 now to stop paying that monthly (no brainer). According to the Federal Trade Commission, borrowers must be told at closing and once a year - about PMI termination and cancellation. They also need to provide a phone number to call for information abou termination and cancellation of PMI. However, federal law does not require your lender or mortgage servicer to cancel the insurance. At that point you would want to find out what percent they are charging you, add that to your rate and see how it compares if you were to re-finance (it may be worth it). Currently rates are about 6.25% and higher depending on your financial situation. With Wells I'm sure your closing costs will be less than going through a broker, but I'd ask what they are. Otherwise plan on it costing up to $10K to refinance. Good luck

Answer 5

2 ways to get rid of PMI. One way would be to refinance your home. You may qualify for a better rate. But you will have closing costs associated with your loan, that will be a couple of thousand dollars. But having a lower LTV and better credit, given good mortgage history, it may be the best option.
If you have a good rate and just want to get rid of your PMI, you can have an appraisal done, $300, and submit it to your lender. By law they are supposed to take PMI off your home when you hit 78% LTV. Unfortunately this does not take into consideration that your home's value has increased. The appraisal will show the appreciation on your home and your bank should drop your PMI.
If your house is worth 420K and you owe 210K, your LTV is 50%. If you choose to refinance with such a low LTV, you should get a rate of around 6.0%, 30 years fixed, depending on your credit. You can check mortgage rates at bankrate.com.

Answer 6

What was your house appraised at when you took out your loan for $210? If you're below 80% of that, ditching PMI is a slam-dunk.

Otherwise, Wells Fargo is right - you have to pay $150 for an appraisal just to find out. Before you fork over the cash, take a look to see what comparable homes have recently SOLD for (not listed for, but actually sold). That will give you an idea if you have a chance.

-->Adam

Answer 7

Jump on the offer for the $150 appraisal!!! It will likely cost you more elsewhere and it is the only way to prove your LTV to anyone. You will be able to make up the fee in a month or two of not paying PMI.

Answer 8

I am surprised by the increase in value. If in 2003 you got a loan with PMI @ $210,000, your value was less than $250,000 (> 80% loan-to-value). You are suggesting that your value has doubled in 4 years.?

If that is true, it sounds like your loan-to-value is less than 50%. You should not be paying PMI, unless you have an FHA loan. You will need to have an appraisal done, in order to prove your loan-to-value. Have the lender do it, but you'll have to pay.

Answer 9

From what you stated about your neighbors' homes selling, I would think that you are well within the 20% you say you need to lose the PMI. Check your loan docs to be sure of your obligations, and that there are no penalties. And you would want to go off current comparable home sales, not anything more than a few months old to determine your home's value. It wouldn't hurt you to check with another lender, rather than your current one. You don't need to continue working with the same lender just because you are with them now. Private lenders tend to have access to more loan programs than banks, and aren't afraid to answer your questions! Ask your friends/relatives if they know of anyone who can help you with a referral, or check out your local yellow pages and good luck

Answer 10

So far you have done your homework so keep going. I would have the appraisal done if I were you. House values have risen steeply in your area and you might be under insured...a major disaster if you ask me.

Go for the appraisal service. They might just offer you a re-fi at a better rate!