How to get rid of PMI ?

Asked by Bronya, Montgomery Village, MD Sat Jan 23, 2010

After holding a property for 5 Years , I still paying PMI which is about $900.00 a year (paid almost $ 5.000 which could have been applied toward the principal ) .

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Vladimir Kats, Agent, Baltimore, MD
Sun Jan 24, 2010
Both of the previous answers are absolutely correct and are very informative. At the same time, they are forgetting another option of getting rid of PMI that could work for you Bronya. That is simply to pay the balance of the mortgage down to below 80%. If this is a possibility financially, it's not a bad choice. What you have to consider is how much your total payment will go down after you pay the balance down. I was in a similar situation and realized that I was paying about 12% interest and PMI on the balance of my mortgage above 80% and that is simply too much. If this is too confusing, feel free to call or email me directly.

Vladimir Kats
http://www.BaltimoreRealEstateExpert.com
0 votes
Tina Beasley, Agent, Saint Augustine, FL
Sat Jan 23, 2010
Bronya,

In order to get rid of paying Private Mortgage Insurance, you must have a loan to value ratio that is below 80%. For instance, if your home's current value is $200,000, then you must owe $160,000 or less on your mortgage. Some banks have a minimum time period that they will charge the PMI even if you are below the 80%. (You will have to refer back to your original paperwork for that information.) At that point, the only way to get rid of it is to refinance your loan. Your home would then have to appraise at less than 80% of the appraised value. Banks use this insurance as a safeguard to foreclosure. They feel that once you owe 80% LTV or less, you would be less likely to want to lose your property to foreclosure since at that time, it is definitely more valuable to you.
Web Reference:  https://www.tinabeasley.com
0 votes
Bob Lowery, , Baltimore County, MD
Sat Jan 23, 2010
The PMI will automatically drop off once you have the balance down to 78% of the original sales price or appraisal, whichever was less. The only other way is to contact your lender/servicer and get an appraisal. It depends on your note, but many will remove PMI once you are at 75% or 80% of the current market value.
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