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PMI removal for Conventional loan

My husband and I just purchased our home for $140,000, we put 5% down so we owe $133,000. The house appraised at $185,000, yet we still have PMI added to our loan. It is a conventional loan. It was always my understanding that when you have 20% equity in your home that you no longer need PMI. So my question is, since we already have the equity needed can we request the PMI be removed immediately? by michelleb23353 from Melbourne, Florida. Apr 15th 2015 Reply


Stephen McWilliam (StephenMcWilliam)
#137 ranked lender in Florida - 44 contributions

No you will need to wait a minimum of 2 years that the MI must be in place or you may want to consider a refinance in 6 months to determine if the refinance costs more or the remaining 18 months MI.

Apr 15th 2015
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David Ortega (DavidOrtega)
#54 ranked lender in Minnesota - 220 contributions

78% is the point that PMI must be automatically removed by your servicer. At 80%, you must request that they remove it and they are not necessarily required to do so. I suggest contacting them and sending them the appraisal, with a request to have your PMI removed. Rates are still at historic lows.....low-mid 3s for 30fix. Feel free to reach out to us as we are more than happy to send you free rate quotes for a refinance. Satori Mortgage - 954-900-9788 - info@satorimortgage.com - www.SatoriMortgage.com

Apr 15th 2015
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Phil Dumouchel (PhilDu)
#32 ranked lender in South Carolina - 2,224 contributions

PMI at purchase is based on the LOWER of your purchase price OR the appraised value. What people forget is that the day you close your house is generally worth what you paid for it, your house is the new "comparable" for the neighborhood - unless/until other similar homes sell after it for a higher value. You'd likely need a new appraisal to request the PMI be dropped and I doubt you'd have an easy time getting that approval - but it doesn't hurt to ask! Yes, you can refinance into a new mortgage as an alternative but you'd have most of the same expenses again - and particularly if you are in FL that does mean a pretty expensive process. However, to eliminate the PMI it might be worth looking into. I can help if you like, just click on my contact info above.

Apr 15th 2015
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William J Acres (William_Acres)
#1 ranked lender in Arizona - 7,802 contributions

No.. PMI is based on your loan to value (LTV) at the time you purchase the home, and LTV is based on the LOWER of the appraised value ($185K) or sales price ($140K).. in your scenario, it goes by the sale price.. if you were to refinance, then you could possibly drop MI, but your property will have to appraise for $167K or higher.. To have MI removed without refinancing, you have to pay the premium for minimum of 24 months before you can request it be removed,, you will have to pay for an appraisal,but so long as the value is there, they will drop it. I'm a Broker here in Scottsdale AZ and I only lend in Arizona. If you or someone you know is looking for financing options, feel free to contact me or pass along my information. William J. Acres, Lender411's number ONE lender in Arizona. 480-287-5714 WilliamAcres.com

Apr 15th 2015
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Ron Pippin (RonPippin)
#26 ranked lender in Utah - 156 contributions

The answers above are correct: lenders look at the lower of the appraised value or the purchase price to calculate PMI. Their contention is that regardless of the appraiser value, if you pay less then that is the current market value. You can ask for a "buy out" of the PMI. This would equate to a higher interest rate or a one time fee (usually a fairly significant amount with only 5% down). Ask your lender so that you at least now your options.

Apr 16th 2015
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