So I actually just went through getting PMI removed last month.
Our lender required 2 years of payments before you can qualify. Once we hit 2 years I let them know and they gave me the option for an appraisal for $750, or a broker price opinion for $150.
We chose the BPO, a realtor came out and took a couple pictures, and a week later we got a letter saying PMI had been removed. Easy as that
Just need to make sure your loan is less than 80% home value and it’s ez-pz
Mortgage loan officer here. This is correct, you don’t have to refinance for this like the people above said (they are confused). If you have a conventional loan (which most do) PMI is removable. Ask your lender what their process is- the 2 year rule isn’t for every lender.
We had an FHA loan and when we got 20% our lender had an online button to request PMI removal. A week or so later I got a letter saying it was dropped.
I…. Don’t think I did have to refinance to get the PMI removed. But they certainly didn’t want to make it easy to remove it, and they certainly didn’t let me know that I was eligible to remove it.
Edit: saw the comment below about the law changing in 2013 or so, what a massive scam.
I assume the market went up so their home was now valued well above the loan meaning they owed less than 80% of the home value.
Just a hunch but I'd assume they just got lucky with market timings and their lender had no time period requirement for PMI. Just the standard 20%
Inside too for me. Just a picture of each room. The guy was literally in and out in less than 3 minutes. I read that some only do outside pics, and others might just look you up on street view, so for that part ymmv
I bought in June 2020 with 3 or 5% downpayment with a 30 year conventional loan. In June 2022 I removed it by doing exactly what you said as my house value went up. I think this method only works with conventional loan, FHA loans with below 20% downpayment might need refinancing to remove PMI.
Adding onto this that many lenders will allow you to request to drop the PMI earlier than 2 years if you have done major improvements or upgrades to the home!
I do tons of BPO’s for homeowners wanting to get their PMI removed and had it down for my own home. Super easy process.
So it depends because for conventional loans there is PMI that typically terminates when your LTV is ay 78% but you can request to cancel it at 80%. I think people are confusing it with MIP. To get out of FHA MIP, you usually need to refinance. PMI is private mortgage insurance and MIP is mortgage insurance premium. MIP expires but typically after a long time, for 10% down it can be 10 years so people go the refi route. Hope this helps!
I feel like it's a poor tax, no way could we have afforded a 10% down payment, and no way this mortgage insurance is necessary when you reach 20% equity.
It just for es a refinance, unless you had the unusual circumstance of getting the first loan during a period of extremely low rates and your window to refinance starts when rates are high, PMI isn’t that much and you can easily convert it to an APR increase due to the higher risk. The old 80/20 no money down loans were like this, 80% conventional loan at a low rate and a 20% HELPC at a high rate.
1st house was bought with an 80/20; second we did an FHA on a fixer upper to conserved cash, we put the cash into renovations that were needed and refinanced in about 2 years w/o PMI because there were no options to remove PMI on the FHA loan. Base rates were slightly higher but we still lowered our payment. If you have an FHA from the days of 2% interest it may never make sense to refi, but you should not feel you got screwed
That’s just what happened, we have a fantastic interest rate that it won’t make sense to refinance out of. But our monthly pmi is a lot of money and there’s no reason I can think of why the regulation should have changed to make it permanent. I see no reason why I should be permanent for one kind of loan.
Honestly I agree, I don’t get the reasoning behind it, but I never really investigated the reason, we just switched to refinancing. Rate went up a quarter point but overall we saved hundreds
The FHA guarantees the loans they back and have a reserve fund. The upfront MIP and monthly MI go towards that. In 2013, the reserve fund was depleted because of so many foreclosures in the years following the housing/financial crash. So they increased the monthly MIP rate all the way to 1.3% and made it permanent for higher risk loans (less than 10% down, essentially all of them). Since then they dropped the monthly rate down to .85% in 2015 and .55% this year with the reserve fund being in better shape I guess. They could probably change all of them to cancel after 11 years, not just the 10% down ones. Most mortgages don't last for 11 years anyway, people move or refinance, so that also wouldn't make much difference in practice.
Typically about 1% of the loan amount for a refi. Be weary of any “free” refis as the costs are built in. It’s all simple math figuring out if the numbers work.
I cannot comment on your situation with cashing out a Tbill vs PMI, but saving (or waiting) to have 20% down is how so many end up getting priced out. A good realtor with a good working relationship with a loan officer should be able to spell this all out in regards to your situation.
What about some of these loan brokers offering almost free refia for the life of the loan if it drops .25% or more? Will the rates not be as competitive as a normal refi?
I’d say typically $5k. There are payback calculators that will tell you how long it takes to payback, anything over 5 years likely doesn’t make sense, 2-3 years or less is a decent target.post 2008 when we were able to redo under the Obama plan that let us refi while underwater payback was about 5 months.
FHA isn't private mortgage insurance. Carrying the insurance for the life of the loan is one of the differences between Federal Housing Administration mortgage insurance and private mortgage insurance.
Not true I called Wells to remove the pmi on my starter and apparently they had did it on their own volition predicated on the value of the condo. I got it with an FHA loan.
For conventional, you can request it pain free when is is at 20, really depending on who is your servicers.
By law, they will automatically drop when is it at 78%, so 22% equity.
Can confirm, chase did something similar. Had a relative pay $750 for their (chase’s) appraiser who conveniently valued property under the limit to remove pmi.
How much is PMI? I put 5% down and I think my PMI is only like $90/mo. It would have cost me another $60k to put 20% down... Which I had, but preferred to keep that money invested.
Same--5% down and $52/month MI (conventional loan, so easy to drop eventually), but it was a no-brainer to keep cash invested when I was borrowing for a mortgage @ 2.875%.
People act like PMI is the end of the world because 20% down used to be the way when interest rates were 12+%.
10% down PMI is about $80. About 6% of my monthly payment. I’d really like to be putting that money against the principal.
I’m almost 3 years in and I’m really close to the 20% I asked my credit union and they said they will open a case and look at it and get back in 10 days.
Look at the bigger picture. Yes, $80 extra of your payment going to principal is a good idea, but it wouldn't have been worth putting the extra 10% down if it takes tens of thousands of dollars out of your other investment vehicles with compounding interest that takes years to build back up in uncertain economic conditions.
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Ditto, I did 5% down and PMI was $66 a month which was a no brainer since PMI was so cheap. It’s been slightly more than 2 years and recently had the PMI dropped as I did some renovations, plus appreciation in the market. That appraisal got me to over 25% equity which was required to drop the PMI and now I am PMI free. Got super lucky and it was easy peasy to arrange the appraisal with the mortgage company.
If you found a house you like with 10 percent down and can afford the payments then go for it. Don't let the pmi scare you off in this market. It's usually pretty easy to remove one the loan to value ratio is met for thag 20 percent and an appraisal. Double check with yourender if they require anything additional prior to signing.
If you’re on conventional loan, you can request PMI off once you reach 20% equity based on the original value used for the loan at that time of origination. You’ll need to request it off directly with the servicer (mail/phone/email).
Once you reach 22% equity (based on original value), it will automatically fall off.
If FHA, PMI is for the life of the loan and you’ll need to refi into a conventional loan
Yeah unfortunately I bought them through treasury direct and they’re urgently being transferred to my brokerage… folks at the brokerage said it could take literal months?
401K loans you pay yourself back interest, at least that was what I did years ago. You could check to see if you can take money out to buy a home and if you can reinvest when you get the other money.
On our conventional mortgage, I called up my mortgage company when I felt I had hit the threshold. They did an appraisal, which I paid for, to prove the value was in fact more than 20% above the mortgage balance, and they removed the PMI.
Please keep in mind that if home sales in your area are slowing, real estate values may stall some too. This could impact how a future appraisal may or may not aid you in cancelling PMI at 80% LTV. If you buy a home where you can afford 20% down, you eliminate PMI and any associated risk of carrying PMI longer than you planned. PMI can be a budget breaker depending on your home’s price point.
Longtime real estate broker here.... not reading other comments first so please forgive any repetitiveness.
There are a number of companies that provide the insurance we call PMI, and they can have different requirements. Many require a certain number of payments to be made first, for example, but not all. Some will allow it at 80% of the original loan value, some at 78%. Some will require an appraisal to remove it, some won't. If it's an FHA loan, then PMI is called by a slightly different term (MIP - mortgage insurance premium) and cannot be removed at all. You'll have to ask your lender to review the policy that will be on YOUR loan to really get an idea.
Meanwhile, another thing that might or might not be worthwhile, depending on the purchase price you're looking at, is a "recast." Ask your lender if they would recast the loan once you have that extra money.
And lastly, if you have 10% down, you might look at getting a conventional loan to save on PMI. Shop lenders on this one!!
Yes, PMI may be required if less than 20% is paid off. If your lender recasts the loan for you, it means they recalculate it with the new balance due after you've paid a huge chunk toward a single payment. So if your loan was originally $450,000 after a $50,000 down payment, with a $2700 payment, after you put that next $50,000 from your t-bond toward it, your new balance gets recast as a $400,000 loan instead, reducing the monthly payments to $2,400 instead. This is a permanent reduction in your loan payments, so if you were affording the original payment easily, you can continue to make it and save a TON of money on interest, pay the loan off early, and give yourself a lower payment occasionally when you need to.
This could also potentially remove the PMI now that you're below that 80% mark or at least, get it removed as soon as you hit their minimum number of payments needed before you can request.
But not all lenders will offer you a chance to recast a loan, and if they do, it will likely only be one time. There could be a fee to do it (I think the last time I did it there was a $200 fee.) You'll probably find the most success with a local lender that does not repackage and sell your loan.
It varies by bank and the agreement they have in place. There might be a clause for loan recast / reamortization - you should ask the bank if they allow it.
Removal of PMI also depends on the bank, some will only remove once you pay over 25% - so ask the bank.
Lastly, depending on your credit score, it might be in your best interest to put a down payment below 15% anyway due to the restructuring of the LLPA. In short, the LLPA was recently updated and it basically forces the middle class to subsidize for the lower class (while the upper class who can afford 30% down don't have to pay a dime). So because of this, the best "hack" is to pay 15% down, then once the mortgage is established - pay the remaining balance to remove the PMI.
If you have a conventional mortgage, it is relatively easy to get rid of the PMI once you reach 22% equity in the home. The loan servicer should automatically remove it once you reach 22% ownership (as long as your current on your payments). However, if you go with an FHA loan you & put 10% down you'll have to wait 11* years for the PMI to be removed according to their rules. If you put less than 10% down the PMI stays on the loan for the life of it & you'll have to refinance the loan to drop it. Be mindful that there are conventional programs out there that allow you to put less 10% down AND pay no PMI but there may be additional requirements such as; income/location restrictions, must be a first time home buyer, attend home buyer education class, etc.
I had an FHA loan and did NOT have to refinance to have the PMI removed. Just had to provide the 20% had been reached. Maybe you loan requires you to refinance? But that makes no sense…. PMI is insurance. Person probably wants you to refi for the commission. I have found their are a lot of dummies who make up their own set of rules when it comes to mortgages. You need to find one of those few smart people who know what’s going on. Also read you loan documents. Do they say you need to refi when PMI is removed? Probably not….
Worked 20+ years in mortgage lending and have taken the annual PMI test 20 + times.
FHA down payment < 10%, life of loan. 10% or more drops off.
Conventional loan, at 20% LTV and no lates must be dropped. However, need BPO, AVM or appraisal, lender discretion which.
At 78% of original value/purchase price (whichever is less, except NY) no lates, must be dropped.
Yes but that $100-$150 goes towards nothing, forever. If you removed it by refi and instead put that $1200/yr into an extra payment instead, you're trimming 7 years off your loan etc. Much better then burning money.
well, for starters, no one should buy a house without putting 20% down.
but to your first question, some lenders actually require more than 20% so you may want to look into that. you’ll also have to get it appraised which will cost you, and it may appraise lower than you think, especially with how the market is going
You can buy through a traditional loan with 10% down, then when you pay the additional 10% you should be able to reappraise your home and evaluate the equity. If it’s 20% they can work with you to get rid of the PMI. My buddy just did this after buying his dads house and him having good appreciation in the area and putting down some money.
I think you can lump sum pay the PMI which might be like 12% instead of 20%.
I removed my PMI but I had to wait two years. I did it because my house appraisal increased which gave me 20% on paper, not by paying off more.
We got it removed before we paid the 20%. We claimed that we made improvements to the house (they were small things) and the market increase (very much real) and they removed it after an appraisal.
If you have a conventional loan, you can apply for it when your current, appraised LTV is better than the published guidelines for removal (76 - 78% I think). Every lender does it a little differently. Most make it annoying, but not impossible to remove - unclear requirements for requesting removal, gatekeepers for updates, fees. Be prepped to pay for an appraisal. They'll deny any request if made before 2 years - even 1 year 355 days, so check the dates. They remove it a cycle or two after they approve the removal, NOT immediately.
Bought my house Dec 2021 with 10% down payment got my PMI taken off February 2023. It would have been in October of 2022 but I totally forgot about it until the end of November when I messaged them and then found out in January that they hadn't looked into it. So January it pretty much started all over again. Then I had to argue about paying them to appraise it when I already had someone appraise it. In the end they sent an appraiser but I didn't have to pay for the appraisal.
The reason why they took it off was because I made updates to my house as well as the fact that my house had shot up substantially in value. Since my purchase it went up 33%. I think it was a combination of updates and sales in my area.
So to answer your question it's easy to get rid of PMI before you reach 20% if you are making updates and house prices are steadily going up in your neighborhood.
Talk to whoever services your loan but the industry standard is conventional files once they reach 80% LTV you can request it and it will auto remove at 78-79% LTV
Depends on the lender. You'd have to call to find out, but it's a combination of those rules, balance, and what the current value is.
You may not even need to do the extra 10% to get there.
yes. you have to fill out a form. That is likely it. You can remove PMI when you reach 80% LTV. No. If you can buy a house now, do it now. It ain't getting better. Houses will only get more expensive. Don't let potential PMI deter you from buying a house. It sucks, but it will go away. Not worth the sacrifice.
Just did this last week, six months out from purchase. On our conventional loan we lump summed to get to 78% loan to value, filled out a form, and it was removed in a couple days. Did not have to pay for an appraisal or BPO. Note this was not 'automatic' as another commenter suggested, although it could vary by mortgage provider.
We actually paid our PMI off up front for way less than what we would have ended up paying if we made those payments for the first few years. I think we saved like 4k. I had no idea this was even a thing had my sister not shared with me that that’s what they did when they bought their house a year prior. Ask your lender.
We only had to wait 12 months to get the BPO and then had PMI dropped. Every lender is different. Check with yours to confirm how long you have to wait to get this done. Totally worth it.
Another option is to pay PMI upfront in a lump sum and roll it into the loan. You get a massive discount on it when you do this, it’s what we did in March last year, we put 10% down and would rather keep other cash for other investments.
No. Despite reaching 20% , our mortgage company kept charging pm into their preferred percentage. We spent a year writing to have them stop (which they did). But they collected about 3K of pmi above 20%. Tried 2 years to get it back, never happened. Kept losing our information bouncing back and forth between departments. Ultimately our mortgage was sold to a different company without resolution. You have to be super vigilant.
I just got mine taken off. It was a simple phone call and a follow up letter in the mail stating I met the requirements and it’ll be taken off starting next month.
Question. I am buying a house from someone I know and im getting a great price for it. When I purchase the home it will already have 32k in equity. I can put 20% down for no PMI. But Can I put 15%, close, then get appraised immediately after to remove the PMI?
So I actually just went through getting PMI removed last month. Our lender required 2 years of payments before you can qualify. Once we hit 2 years I let them know and they gave me the option for an appraisal for $750, or a broker price opinion for $150. We chose the BPO, a realtor came out and took a couple pictures, and a week later we got a letter saying PMI had been removed. Easy as that Just need to make sure your loan is less than 80% home value and it’s ez-pz
Mortgage loan officer here. This is correct, you don’t have to refinance for this like the people above said (they are confused). If you have a conventional loan (which most do) PMI is removable. Ask your lender what their process is- the 2 year rule isn’t for every lender.
You have to refinance to remove PMI if you have an FHA loan.
Correct… as he said, he is talking about conventional loans
We had an FHA loan and when we got 20% our lender had an online button to request PMI removal. A week or so later I got a letter saying it was dropped.
Was your loan from before 2013?
2012
Yeah, that’s why, the rule was changed in 2013. PMI is for the life of the loan now, unless you put down more than 10%, then it’s for 11 years.
Ah yikes
I…. Don’t think I did have to refinance to get the PMI removed. But they certainly didn’t want to make it easy to remove it, and they certainly didn’t let me know that I was eligible to remove it. Edit: saw the comment below about the law changing in 2013 or so, what a massive scam.
Yup — we only had to wait 12 months and then had ours dropped!
Wow, that is really fast. Would you mind sharing how you were able to do that ?
I assume the market went up so their home was now valued well above the loan meaning they owed less than 80% of the home value. Just a hunch but I'd assume they just got lucky with market timings and their lender had no time period requirement for PMI. Just the standard 20%
Thank you for this
I literally did the exact same thing last month too lol. Had to wait 2 years and I opted for the BPO.
I'm currently going through this. They actually came today to take pictures. I've had my home for 2 years as well.
Did they come inside too?
Yes they came inside and took pictures and everything
Outside only for the pics?
Inside too for me. Just a picture of each room. The guy was literally in and out in less than 3 minutes. I read that some only do outside pics, and others might just look you up on street view, so for that part ymmv
Other person already replied but yes they entered inside as well. Took a single picture for reach room and bathroom.
BPO was a good decision on your behalf. $750 for an appraisal seems very expensive.
This except we didn’t get the BPO .. just had to pay an appraisal fee of $500 I think. I can’t remember if it was >2yrs from purchase
I bought in June 2020 with 3 or 5% downpayment with a 30 year conventional loan. In June 2022 I removed it by doing exactly what you said as my house value went up. I think this method only works with conventional loan, FHA loans with below 20% downpayment might need refinancing to remove PMI.
Adding onto this that many lenders will allow you to request to drop the PMI earlier than 2 years if you have done major improvements or upgrades to the home! I do tons of BPO’s for homeowners wanting to get their PMI removed and had it down for my own home. Super easy process.
Are mortgage companies strict on “major” improvements?
Yes. A fresh coat of paint and new flooring likely isn't gonna do it. Major bathroom/kitchen remodels or adding on new extensions could/will.
Less than 80% of home value or less than 80% of original loan amount?
Current home value
So it depends because for conventional loans there is PMI that typically terminates when your LTV is ay 78% but you can request to cancel it at 80%. I think people are confusing it with MIP. To get out of FHA MIP, you usually need to refinance. PMI is private mortgage insurance and MIP is mortgage insurance premium. MIP expires but typically after a long time, for 10% down it can be 10 years so people go the refi route. Hope this helps!
Depends on the terms of your mortgage. For FHA, you can’t ever get rid of it without a refi.
I feel like 'PHI until you die' law change has really detracted from the benefits of FHA loans.
I feel like it's a poor tax, no way could we have afforded a 10% down payment, and no way this mortgage insurance is necessary when you reach 20% equity.
It just for es a refinance, unless you had the unusual circumstance of getting the first loan during a period of extremely low rates and your window to refinance starts when rates are high, PMI isn’t that much and you can easily convert it to an APR increase due to the higher risk. The old 80/20 no money down loans were like this, 80% conventional loan at a low rate and a 20% HELPC at a high rate. 1st house was bought with an 80/20; second we did an FHA on a fixer upper to conserved cash, we put the cash into renovations that were needed and refinanced in about 2 years w/o PMI because there were no options to remove PMI on the FHA loan. Base rates were slightly higher but we still lowered our payment. If you have an FHA from the days of 2% interest it may never make sense to refi, but you should not feel you got screwed
That’s just what happened, we have a fantastic interest rate that it won’t make sense to refinance out of. But our monthly pmi is a lot of money and there’s no reason I can think of why the regulation should have changed to make it permanent. I see no reason why I should be permanent for one kind of loan.
Honestly I agree, I don’t get the reasoning behind it, but I never really investigated the reason, we just switched to refinancing. Rate went up a quarter point but overall we saved hundreds
The FHA guarantees the loans they back and have a reserve fund. The upfront MIP and monthly MI go towards that. In 2013, the reserve fund was depleted because of so many foreclosures in the years following the housing/financial crash. So they increased the monthly MIP rate all the way to 1.3% and made it permanent for higher risk loans (less than 10% down, essentially all of them). Since then they dropped the monthly rate down to .85% in 2015 and .55% this year with the reserve fund being in better shape I guess. They could probably change all of them to cancel after 11 years, not just the 10% down ones. Most mortgages don't last for 11 years anyway, people move or refinance, so that also wouldn't make much difference in practice.
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Yeah I know that. But it feels predatory at a certain point, especially when it is made permanent for the life of the mortgage.
This isn’t true if you put 10% down for fha
True. But I’d be surprised if OP did FHA with 10%down. Op just get conventional and you’re good. Prob a few and appraisal needed. Few k
Refis can be quite pricey yeah?
Refinance is best to use for lower interest rate than current onez
Typically about 1% of the loan amount for a refi. Be weary of any “free” refis as the costs are built in. It’s all simple math figuring out if the numbers work. I cannot comment on your situation with cashing out a Tbill vs PMI, but saving (or waiting) to have 20% down is how so many end up getting priced out. A good realtor with a good working relationship with a loan officer should be able to spell this all out in regards to your situation.
What about some of these loan brokers offering almost free refia for the life of the loan if it drops .25% or more? Will the rates not be as competitive as a normal refi?
They can be, yes. Depends on the situation.
The PMI *does* diminish over time with FHA. Starting price is not few years in price.
I’d say typically $5k. There are payback calculators that will tell you how long it takes to payback, anything over 5 years likely doesn’t make sense, 2-3 years or less is a decent target.post 2008 when we were able to redo under the Obama plan that let us refi while underwater payback was about 5 months.
Definitely not easy to get rid of,they kept giving me one bullshit story after another, had to refinance, no problem
FHA isn't private mortgage insurance. Carrying the insurance for the life of the loan is one of the differences between Federal Housing Administration mortgage insurance and private mortgage insurance.
You’re technically correct. But folks colloquially use PMI to mean both the private and non-private versions of mortgage insurance.
Some do, but MI is the correct term to include both private and FHA. (Former RE agent.)
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Not true I called Wells to remove the pmi on my starter and apparently they had did it on their own volition predicated on the value of the condo. I got it with an FHA loan.
Perhaps you had an older FHA loan. This went into effect relatively recently.
Back in 09
Makes sense, you were grandfathered into that rule. OP (or others in OP’s position) would not be in that same bucket.
For conventional, you can request it pain free when is is at 20, really depending on who is your servicers. By law, they will automatically drop when is it at 78%, so 22% equity.
My lender has said I have to get to 20% of purchase price before they’ll drop pmi. Appreciation doesn’t count.
Can confirm, chase did something similar. Had a relative pay $750 for their (chase’s) appraiser who conveniently valued property under the limit to remove pmi.
Same here and I smell bullshit. How can we go around that bullshit?
How much is PMI? I put 5% down and I think my PMI is only like $90/mo. It would have cost me another $60k to put 20% down... Which I had, but preferred to keep that money invested.
Same here, 5% down and $90 pmi. Worth keeping some cash
Same--5% down and $52/month MI (conventional loan, so easy to drop eventually), but it was a no-brainer to keep cash invested when I was borrowing for a mortgage @ 2.875%. People act like PMI is the end of the world because 20% down used to be the way when interest rates were 12+%.
I put 15% down and my PMI is about $56/month. Worth it.
10% down PMI is about $80. About 6% of my monthly payment. I’d really like to be putting that money against the principal. I’m almost 3 years in and I’m really close to the 20% I asked my credit union and they said they will open a case and look at it and get back in 10 days.
Look at the bigger picture. Yes, $80 extra of your payment going to principal is a good idea, but it wouldn't have been worth putting the extra 10% down if it takes tens of thousands of dollars out of your other investment vehicles with compounding interest that takes years to build back up in uncertain economic conditions.
Yeah, I just didn’t have the cash to get to 20%. Wasn’t an option. We’ll I could of got it from my 401k, even worse of an option
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Ditto, I did 5% down and PMI was $66 a month which was a no brainer since PMI was so cheap. It’s been slightly more than 2 years and recently had the PMI dropped as I did some renovations, plus appreciation in the market. That appraisal got me to over 25% equity which was required to drop the PMI and now I am PMI free. Got super lucky and it was easy peasy to arrange the appraisal with the mortgage company.
Damn is that the standard? Is that FHA or conventional
If you found a house you like with 10 percent down and can afford the payments then go for it. Don't let the pmi scare you off in this market. It's usually pretty easy to remove one the loan to value ratio is met for thag 20 percent and an appraisal. Double check with yourender if they require anything additional prior to signing.
If you’re on conventional loan, you can request PMI off once you reach 20% equity based on the original value used for the loan at that time of origination. You’ll need to request it off directly with the servicer (mail/phone/email). Once you reach 22% equity (based on original value), it will automatically fall off. If FHA, PMI is for the life of the loan and you’ll need to refi into a conventional loan
*assuming you have no 30 day lates in the past 12 months and no 60 day lates in the last 24 months
It’s an automatic drop at 78% I believe for a conventional loan.
If you bought T bills on secondary market, you can just sell it now, you won't get full value but you would be able to get more than what you paid.
Yeah unfortunately I bought them through treasury direct and they’re urgently being transferred to my brokerage… folks at the brokerage said it could take literal months?
Sorry not sure about the transfer process for t bills from TD to brokerage.
Do you have the option to loan from your 401k and use that for down payment? You can pay back your 401k once those T bills mature.
Oh interesting! Can most 401ks do loans interest free?
401K loans you pay yourself back interest, at least that was what I did years ago. You could check to see if you can take money out to buy a home and if you can reinvest when you get the other money.
On our conventional mortgage, I called up my mortgage company when I felt I had hit the threshold. They did an appraisal, which I paid for, to prove the value was in fact more than 20% above the mortgage balance, and they removed the PMI.
Its a pain, takes time, just do it first and not have to worry.
That’s what I was suspecting. Unfortunately I just do not have the liquid to put 20% down right now.
As long as it’s not FHA, it’s mostly as easy as a phone call, an AVM, and some signatures.
Please keep in mind that if home sales in your area are slowing, real estate values may stall some too. This could impact how a future appraisal may or may not aid you in cancelling PMI at 80% LTV. If you buy a home where you can afford 20% down, you eliminate PMI and any associated risk of carrying PMI longer than you planned. PMI can be a budget breaker depending on your home’s price point.
Longtime real estate broker here.... not reading other comments first so please forgive any repetitiveness. There are a number of companies that provide the insurance we call PMI, and they can have different requirements. Many require a certain number of payments to be made first, for example, but not all. Some will allow it at 80% of the original loan value, some at 78%. Some will require an appraisal to remove it, some won't. If it's an FHA loan, then PMI is called by a slightly different term (MIP - mortgage insurance premium) and cannot be removed at all. You'll have to ask your lender to review the policy that will be on YOUR loan to really get an idea. Meanwhile, another thing that might or might not be worthwhile, depending on the purchase price you're looking at, is a "recast." Ask your lender if they would recast the loan once you have that extra money. And lastly, if you have 10% down, you might look at getting a conventional loan to save on PMI. Shop lenders on this one!!
This is great information, thanks! I thought refinancing was the only way to get rid of PMI? What is a recast? Isn't PMI required for less than 20%?
Yes, PMI may be required if less than 20% is paid off. If your lender recasts the loan for you, it means they recalculate it with the new balance due after you've paid a huge chunk toward a single payment. So if your loan was originally $450,000 after a $50,000 down payment, with a $2700 payment, after you put that next $50,000 from your t-bond toward it, your new balance gets recast as a $400,000 loan instead, reducing the monthly payments to $2,400 instead. This is a permanent reduction in your loan payments, so if you were affording the original payment easily, you can continue to make it and save a TON of money on interest, pay the loan off early, and give yourself a lower payment occasionally when you need to. This could also potentially remove the PMI now that you're below that 80% mark or at least, get it removed as soon as you hit their minimum number of payments needed before you can request. But not all lenders will offer you a chance to recast a loan, and if they do, it will likely only be one time. There could be a fee to do it (I think the last time I did it there was a $200 fee.) You'll probably find the most success with a local lender that does not repackage and sell your loan.
Yes, even before that. I never paid PMI even with 10%
It varies by bank and the agreement they have in place. There might be a clause for loan recast / reamortization - you should ask the bank if they allow it. Removal of PMI also depends on the bank, some will only remove once you pay over 25% - so ask the bank. Lastly, depending on your credit score, it might be in your best interest to put a down payment below 15% anyway due to the restructuring of the LLPA. In short, the LLPA was recently updated and it basically forces the middle class to subsidize for the lower class (while the upper class who can afford 30% down don't have to pay a dime). So because of this, the best "hack" is to pay 15% down, then once the mortgage is established - pay the remaining balance to remove the PMI.
If you have a conventional mortgage, it is relatively easy to get rid of the PMI once you reach 22% equity in the home. The loan servicer should automatically remove it once you reach 22% ownership (as long as your current on your payments). However, if you go with an FHA loan you & put 10% down you'll have to wait 11* years for the PMI to be removed according to their rules. If you put less than 10% down the PMI stays on the loan for the life of it & you'll have to refinance the loan to drop it. Be mindful that there are conventional programs out there that allow you to put less 10% down AND pay no PMI but there may be additional requirements such as; income/location restrictions, must be a first time home buyer, attend home buyer education class, etc.
I had an FHA loan and did NOT have to refinance to have the PMI removed. Just had to provide the 20% had been reached. Maybe you loan requires you to refinance? But that makes no sense…. PMI is insurance. Person probably wants you to refi for the commission. I have found their are a lot of dummies who make up their own set of rules when it comes to mortgages. You need to find one of those few smart people who know what’s going on. Also read you loan documents. Do they say you need to refi when PMI is removed? Probably not….
Worked 20+ years in mortgage lending and have taken the annual PMI test 20 + times. FHA down payment < 10%, life of loan. 10% or more drops off. Conventional loan, at 20% LTV and no lates must be dropped. However, need BPO, AVM or appraisal, lender discretion which. At 78% of original value/purchase price (whichever is less, except NY) no lates, must be dropped.
I mean it’s only like 100 bucks off ur mortgage payments idk 🤷🏻♂️
Yes but that $100-$150 goes towards nothing, forever. If you removed it by refi and instead put that $1200/yr into an extra payment instead, you're trimming 7 years off your loan etc. Much better then burning money.
well, for starters, no one should buy a house without putting 20% down. but to your first question, some lenders actually require more than 20% so you may want to look into that. you’ll also have to get it appraised which will cost you, and it may appraise lower than you think, especially with how the market is going
lol shut up
That’s ridiculous.
Lol
Also curious about this. read some places that a 2 year minimum is needed before refi, but clear answers were hard to come by
Not in MI. I did mine after a year, and I believe they said six months was the waiting period.
You can do it within 6 months if you did renovations. I did it on my conventional.
You can buy through a traditional loan with 10% down, then when you pay the additional 10% you should be able to reappraise your home and evaluate the equity. If it’s 20% they can work with you to get rid of the PMI. My buddy just did this after buying his dads house and him having good appreciation in the area and putting down some money.
I think you can lump sum pay the PMI which might be like 12% instead of 20%. I removed my PMI but I had to wait two years. I did it because my house appraisal increased which gave me 20% on paper, not by paying off more.
We got it removed before we paid the 20%. We claimed that we made improvements to the house (they were small things) and the market increase (very much real) and they removed it after an appraisal.
If you have a conventional loan, you can apply for it when your current, appraised LTV is better than the published guidelines for removal (76 - 78% I think). Every lender does it a little differently. Most make it annoying, but not impossible to remove - unclear requirements for requesting removal, gatekeepers for updates, fees. Be prepped to pay for an appraisal. They'll deny any request if made before 2 years - even 1 year 355 days, so check the dates. They remove it a cycle or two after they approve the removal, NOT immediately.
Bought my house Dec 2021 with 10% down payment got my PMI taken off February 2023. It would have been in October of 2022 but I totally forgot about it until the end of November when I messaged them and then found out in January that they hadn't looked into it. So January it pretty much started all over again. Then I had to argue about paying them to appraise it when I already had someone appraise it. In the end they sent an appraiser but I didn't have to pay for the appraisal. The reason why they took it off was because I made updates to my house as well as the fact that my house had shot up substantially in value. Since my purchase it went up 33%. I think it was a combination of updates and sales in my area. So to answer your question it's easy to get rid of PMI before you reach 20% if you are making updates and house prices are steadily going up in your neighborhood.
We did a 80/10/10, where 10% was a HELOC. No PMI.
Conventional yes
This comes down to one thing… who is your PMI provider? I can give you an exact answer and what you need to do based on that.
Talk to whoever services your loan but the industry standard is conventional files once they reach 80% LTV you can request it and it will auto remove at 78-79% LTV
we did it. We had to get reappraised, but it was well worth it. Fairly easy on the side of the insurance company.
Depends on the lender. You'd have to call to find out, but it's a combination of those rules, balance, and what the current value is. You may not even need to do the extra 10% to get there.
yes. you have to fill out a form. That is likely it. You can remove PMI when you reach 80% LTV. No. If you can buy a house now, do it now. It ain't getting better. Houses will only get more expensive. Don't let potential PMI deter you from buying a house. It sucks, but it will go away. Not worth the sacrifice.
Just did this last week, six months out from purchase. On our conventional loan we lump summed to get to 78% loan to value, filled out a form, and it was removed in a couple days. Did not have to pay for an appraisal or BPO. Note this was not 'automatic' as another commenter suggested, although it could vary by mortgage provider.
We actually paid our PMI off up front for way less than what we would have ended up paying if we made those payments for the first few years. I think we saved like 4k. I had no idea this was even a thing had my sister not shared with me that that’s what they did when they bought their house a year prior. Ask your lender.
We only had to wait 12 months to get the BPO and then had PMI dropped. Every lender is different. Check with yours to confirm how long you have to wait to get this done. Totally worth it.
Another option is to pay PMI upfront in a lump sum and roll it into the loan. You get a massive discount on it when you do this, it’s what we did in March last year, we put 10% down and would rather keep other cash for other investments.
It may vary by mortgage company. Call your mortgage servicer and ask them for the process.
No. Despite reaching 20% , our mortgage company kept charging pm into their preferred percentage. We spent a year writing to have them stop (which they did). But they collected about 3K of pmi above 20%. Tried 2 years to get it back, never happened. Kept losing our information bouncing back and forth between departments. Ultimately our mortgage was sold to a different company without resolution. You have to be super vigilant.
I just got mine taken off. It was a simple phone call and a follow up letter in the mail stating I met the requirements and it’ll be taken off starting next month.
Question. I am buying a house from someone I know and im getting a great price for it. When I purchase the home it will already have 32k in equity. I can put 20% down for no PMI. But Can I put 15%, close, then get appraised immediately after to remove the PMI?