jitterbug
Established Member
Joined: Jan 4, 2011 18:14:48 GMT -5
Posts: 379
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Post by jitterbug on Feb 13, 2011 22:20:53 GMT -5
I am asking this on behalf of my son, since I haven't had a mortgage for 10 years and never paid PMI anyway.
He bought a house this summer for $88,000 and in looking around online recently, I've seen 2 houses in his subdivision with the exact same floor plan as his house (with unfinished basements and his is finished). One listed for $114,000 and one listed for $125,000. I realize that these houses haven't sold yet for these prices - but if they do sell for anywhere in that ballpark, I assume that might mean that his house has increased in value substantially since he bought it - which means his equity has increased, correct? I honestly don't know much about PMI...but I thought that if he had more than 20% equity in his home, he wouldn't have to pay this anymore. Is this true - and how would he go about getting PMI removed?
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constanz22
Senior Member
Joined: Dec 18, 2010 14:32:17 GMT -5
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Post by constanz22 on Feb 13, 2011 22:27:25 GMT -5
It depends on the type of loan and the lender. If it's FHA, there is also a minimum time that you have to carry PMI. I think it's 5 years. When I was working with Wells Fargo recently regarding a mortgage, I was told that you had to pay down the original loan amount 22% to be able to get rid of PMI. The actual amount of equity in the home didn't matter. I already had 50% equity in the home as one parent gifted me their half. You'd need more info for the most appropriate answer. Easiest thing would be for him to just contact his lender and ask...
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Apple
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Post by Apple on Feb 13, 2011 22:36:26 GMT -5
My dad was a realtor and my understanding has always been that it is 20% of the appraised value. I refinanced my house about a year and a half ago and if I left 25% equity in my house I would not have to pay PMI (so I only refinanced 70% of the appraised value). I'm pretty positive that in order to get rid of the PMI, he would have to have the place appraised at the higher value and until those houses sell they won't help his appraised value, since they can't be "comped". He'd likely also have to refinance.
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Deleted
Joined: May 3, 2024 19:32:38 GMT -5
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Post by Deleted on Feb 14, 2011 0:56:29 GMT -5
He needs to read his PMI contract/rider to his loan. If it's a conventional loan its usually 24 months and the loan can't be more than 78% of appraised value.
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Waffle
Senior Member
Joined: Jan 12, 2011 11:31:54 GMT -5
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Post by Waffle on Feb 14, 2011 8:39:39 GMT -5
If it's a local lender just have him call the loan department and ask. I did that with my mortage, at first they claimed I had to fill out a bunch of forms, but a couple of days later I got a letter in the mail with my new payment information. The new payment did not include the PMI.
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