Can PMI be cancelled earlier than 2 years?

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PostPosted: Sun Apr 19, 2009 3:13 am   Post subject: Can PMI be cancelled earlier than 2 years?  

Hi:



I am a home buyer in the market for a short sale/foreclosure. As in 99% of the cases, getting a home through a short sale/foreclosure typically means you will have some sort of 'automatic' equity in the home. That being the case, can I get an appraisal after I purchase a home and if the appraisal comes back that shows, along with my downpayment, I am below the 80% or even 75% threshold for PMI, I can get rid of PMI? I've had three lenders say, "No...you must fulfill a 2 year period of having PMI." while another lender said, "yes...we deal with two PMI companies that don't have a seasonal length of time required to cancel." Is that true???


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PostPosted: Sun Apr 19, 2009 4:56 am   Post subject:   

Hi Guest,



Although you have put this question over here in home insurance forum but still what i feel is that you should ask this question on mortgagefit forum (link for this forum is available on the upper middle side of this page named as mortgage forum)

or else click here

http://www.mortgagefit.com/discuss/





you will get better answer for this question if you can post over there.



Thanks for your patience.

WinkWink



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PostPosted: Sun Apr 19, 2009 1:52 pm   Post subject:   

Quote:
I am below the 80% or even 75% threshold for PMI, I can get rid of PMI? I've had three lenders say, "No...you must fulfill a 2 year period of having PMI." while another lender said, "yes...we deal with two PMI companies that don't have a seasonal length of time required to cancel." Is that true???
It depends on the wording of the insurance contract...every pmi ins i've ever had said 80%, so I was able to get it removed quickly...shop for the carrier (unless it's a state thing) that does not have a min. time, but percentage of debt/coll ratio instead.


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PostPosted: Wed Apr 22, 2009 1:13 am   Post subject:   

I have seen several PMI insurance policies that actually say that it is mandatory until you either reach 80% of Fair Market Value or 80% of the Original Purchase Price (whichever is less). This means:



You Buy your House at $100,000



5 Years Later your mortgage balance is $94,000

Your House is now Appraised at 120,000



IF you were allowed to choose...you could drop PMI! However, the PMI insurance company could make you keep it until you only owed $80,000 on your mortgage (unless you chose to refinance).



It all depends on how it is worded, but it is not uncommon to see people refinancing their mortgages in order to drop PMI!

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PostPosted: Wed Apr 22, 2009 12:51 pm   Post subject:   

Hi Chris,



It's clear that once it's $80,000 I'd be allowed to drop PMI unless I choose to refinance. However, I'm not too sure of what minimum amount would allow me to drop PMI if I'm opting for a refinance.

Crossbreed


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PostPosted: Thu Apr 23, 2009 2:30 pm   Post subject:   

Hi..



Quote:
IF you were allowed to choose...you could drop PMI!


If I'd be allowed to choose and I don't go for refinancing..can the PMI company still force me to keep it?



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PostPosted: Fri Apr 24, 2009 9:49 am   Post subject:   

Hi Amit,



Quote:
you will get better answer for this question if you can post over there.


If it's a question regarding mortgage then I'm sure the mortgage forum would be a better place. On the other hand, if it's a query on PMI then an insurance forum should be the right place.



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PostPosted: Sat Apr 25, 2009 1:37 pm   Post subject:   

Quote:
If I'd be allowed to choose and I don't go for refinancing..can the PMI company still force me to keep it?


I think they would ask you to carry it. Steven
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PostPosted: Tue May 05, 2009 10:41 am   Post subject:   

Hi all

A PMI can be dropped only if the balance outstanding principal is 78 % of the total Mortgage. By Law no insurance co. can force you to keep the PMI if you have got a balance of 78% on your mortgage.

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PostPosted: Tue May 05, 2009 10:59 am   Post subject:   

Hi DJ,



that was completely technical information you've shared. If it is true what you've mentioned it is a sad state situation on how the insurance co. guys manipulate misguide and fool people on the information.

But along with the 78% o/s principal criteria there has to be some minimum period criteria parallel to it.



GNP



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PostPosted: Tue May 05, 2009 11:22 pm   Post subject:   

Quote:
If it is true what you've mentioned it is a sad state situation on how the insurance co. guys manipulate misguide and fool people on the information.
WHAT? gnp? How do you figure that? and 'which' ins co. guys are manipulating and misguiding and fooling people?



by the way..I've had PMI dropped from three or four mortgages over the years, and the critera was less than 80%, no time length.


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PostPosted: Wed May 06, 2009 8:43 am   Post subject:   

@ GNP



Well about the PMI to be dropped all you need to is a minimum balance of 78% on your principal amout.

Some of them would have the limit set to 80% depending on company to company.



And it dosnt have any time limit.. you can pay more than your TAT mthly paynt and pay if off earlier...

there is no such time limit.



Aad adding to the above PMI protects Lenders investors from financial loss if a borrower does not repay a loan. It also benefits the borrower in that many lenders require a lower down payment when a loan is covered by mortgage insurance than if it were not.. Most of the times the PMI is reomoved by the Lender when they are sure that they are not at any kind of undue risk and that is how they have this criteria of 78%-80%



@ GNp if you still need more clarification on PMI please feel free to ask..

I have been working with a sub prime lender and can help you with any questions you have anout Mortgage.





Thanks



(DJ, you had three separate posts a few minutes apart, I combined them all into this one-thanks lori)

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PostPosted: Thu Nov 25, 2010 6:25 pm   Post subject: PMI  

I was under the impression that PMI insurance could be dropped irrigardless of the equity if you made all your payments on time for two years. Is that false?


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PostPosted: Sat Nov 27, 2010 11:58 pm   Post subject:   

Irregardless of the fact that there is no such word as irregardless, making payments for two years has nothing to do with terminating PMI coverage on a mortgage. Your property value (equity) compared to your outstanding mortgage determines whether it can be terminated or not. You must be at or below the 80% LTV mark, and you must provide an appraisal at your expense, performed by one of your lender's approved appraisers.



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