getting rid of PMI on mortgage

[SVT Lurch]

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.

Exactly, listen to Adam. Make VERY certain you can get rid of it before you pay it down - you won't get the money back. Then just run the breakeven - 6000 / 40 = 150 months.

You might be able to still do 80/10/10 where it's 1st mortgage/2nd mortgage/downpayment and that will let you avoid PMI as well since you are capping your first at 80%.

The typical 80/20 (no downpayment) is gone from what I know and you can sometimes find am 80/15/5 I think. SVT Lurch would probably know as he's at a broker shop I believe so he would know more banks than I do.

You're correct, 0% down is gone (other than USDA rural development loans) but you can still do as little as 5% down (the rates on the 15% 2nd lien are still in the 8.xxx% range for the most part (one will do 7.500%)). Going with mortgage insurance actually results in a cheaper monthly payment now because the monthly factor dropped to 0.67% on a 95% Loan To Value file.

EDIT: and VA still allows 0 down if you're a veteran.

[94form2000z]

Paying $6K to save $500/yr is not a wise move unless you anticipate paying PMI for 10+ years.
The extra funds are better spent paying down the principle.
1 extra payment per year knocks 4-7 years off the backside of 30 yr loan.

Him paying a lump 6k will go directly to the principle. But as i said I would pay that out over the next 12 months then get it off.