getting rid of PMI on mortgage

[Memo]

I need to pay off $6k to get my loan to under 78% and get rid of PMI. Would you do it or keep the cash? PMI is only $41.75 a month but it's about $500 a year that could go towards principal.

I'm thinking of just doing a lump sum payment of $6k on my next mortgage payment. Would you?

[Sgt Beavis]

It's a challenging question in today's economic environment. IMO it depends on your level of certainty for the future. If you feel good about your future outlook then go for it. If you have quite a bit of uncertainty then you should consider keeping that cash for now.

[347Mike]

This may not be the best way of looking at it but its 40 bucks and 6k is quite a bit of cash. I like having my cash in my bank in the event of what ifs. If it is 1-2k I would consider paying it off but 6k is quite a bit.

[sosoe]

. I like having my cash in my bank in the event of what ifs. If it is 1-2k I would consider paying it off but 6k is quite a bit.

X2, What I would do. 6k is a lot of cash. 1-2k or maybe even 3k ill probably do.

[Randy]

This may not be the best way of looking at it but its 40 bucks and 6k is quite a bit of cash. I like having my cash in my bank in the event of what ifs. If it is 1-2k I would consider paying it off but 6k is quite a bit.

this

[94form2000z]

Maybe just pay an extra $500 a month on the next 12 paymentts.. that way if the "what ifs" come up you still have some stash.

I was getting shafted at $80+ a month when i bought my house. I think it is BS that you have no choice in who the lender uses for it. Anyways I paid 35K off mine in the first 15 months and had it removed. I took full advantage of that second income when it was around.

Refinanced after 3 years and now owe less than 14 years. Been there about 4 now. It is real nice to see more principle being applied than interest out of your payment.

[juiceweezl]

If you can afford to pay it down and get rid of PMI, then do it. If paying that much straps you, then don't. Personally, I'd look at a refi though. You may be able to get a 15 year rate close to 3% right now.

[AdamLX]

Have you heard this from your current lender or are you basing this off the usual requirements?

I ask because there can be a lot of red tape in getting it removed. You may be able to reach 78% based on original value, but the majority of lenders will require a new appraisal (lender ordered) to verify the current LTV in order to have the PMI removed.

The appraisal situation in this market is what is causing issues with getting PMI removed.

[BP]

Have you heard this from your current lender or are you basing this off the usual requirements?

I ask because there can be a lot of red tape in getting it removed. You may be able to reach 78% based on original value, but the majority of lenders will require a new appraisal (lender ordered) to verify the current LTV in order to have the PMI removed.

The appraisal situation in this market is what is causing issues with getting PMI removed.

My lender has a 5 year term for PMI and the percentage and yeah it's based on current LTV, not what it was when I signed the paperwork.

[momo]

Have you heard this from your current lender or are you basing this off the usual requirements?

I ask because there can be a lot of red tape in getting it removed. You may be able to reach 78% based on original value, but the majority of lenders will require a new appraisal (lender ordered) to verify the current LTV in order to have the PMI removed.

The appraisal situation in this market is what is causing issues with getting PMI removed.

oh question for you,
say you are buying a house for $150K, putting down 10% leaving you with a home loan for 135K. say that house is appraised for 180K.

can you negotiate no PMI on that? before you get the loan/after?

[AdamLX]

oh question for you,
say you are buying a house for $150K, putting down 10% leaving you with a home loan for 135K. say that house is appraised for 180K.

can you negotiate no PMI on that? before you get the loan/after?

If you're buying, your loan to value for PMI, credit risk etc will be based solely on the sales contract price. Back in the day there were some programs you could get creative with, but now all calculations are based on contract price, not appraised value (for purchases).

The only way you can get around true PMI is to take TAMI (Tax Advantedge Mortgage Insurance). You will take a slightly higher rate (for the life of the loan), but will not be subjected to monthly PMI.

This was popular back when PMI was not a tax deductible expense, but now that it is this option isn't as good. A little trick though is if you are not going to be in the house too long, take the TAMI option as it will usually net you a lower monthly payment than if you were paying PMI. The TAMI factors are actually cheaper than monthly PMI, but this does change periodically.

[Chopped54]

To add what the others have said if you are basing off your current balance it may be a bit more then $6000. You would have to contact the mortgage company to get the exact amount. They will send you a packet with all the steps/requirements to get it removed.

One way to look at it is you would make a principle reduction payment. This not only saves you the pointless PMI payment, but also cuts the years off the end of the note SAVING your more on interest payments, so savings in the end is a lot more then the $4X PMI a month.

[Woods Racing Transmission]

oh question for you,
say you are buying a house for $150K, putting down 10% leaving you with a home loan for 135K. say that house is appraised for 180K.

can you negotiate no PMI on that? before you get the loan/after?

If your getting a loan for 135,000 on a house that appraised fro 180,000 why would you need PMI you under the 78% Loan to Value Ratio.

180,000 * .78 = 140400

Or am I wrong?

[jakesford]

I would do it if you are comfortable with your liquidity... The way the economy has been and is going, having liquid assets is > PMI.

As suggested maybe just increase your payment each month and try to get rid of PMI in a years time

[momo]

If your getting a loan for 135,000 on a house that appraised fro 180,000 why would you need PMI you under the 78% Loan to Value Ratio.

180,000 * .78 = 140400

Or am I wrong?

the bank is using the loan value rather than the appraised value because its a new loan.

it's basically whichever suits them best.