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There is wording in my FHA loan saying that to drop the PMI we must pay the LTV down to 78% of the initial price or appraised value at time of purchase, which ever is lower. This eliminates the possibility of us using upgrades and a re-appraisal to eliminate the PMI. Is this normal?

Mike

eric1 · Posted: Mon Apr 13, 2009 1:10 pm Post subject:

Yes this is standard. If you purchased the home for $100k and you borrowed $90k, then once your loan balance is down to $78k...you could get the PMI dropped.

I am not too familiar with that area of th FHA guielines. I would haev thought that percentage would have been 80%

gmakerley · Posted: Mon Apr 13, 2009 1:48 pm Post subject:

yeah, the documentation states 78%. in this economy, that's not too shabby. i do feel your pain, however, mikesz, about not being able to demonstrate upgrades, etc.

Guest

I wish I would have known this earlier. We are already through the underwriting process and approved for the FHA loan. I'm going to talk to my lender about going with a conventional loan for the sole purpose of allowing a higher appraisal to cancel the PMI. The area we are in should support any upgrades we make and based on surrounding homes I don't see a problem with being able to cancel PMI within a few years as long as the criteria is loan to value and not Loan to original sales price as with FHA. I'm not sure how much work has to be redone on the lender's end considering how far we are into the FHA loan process and how open he would or should be to changing to a conventional loan at this point. Closing is scheduled for May 1. Any ideas? Thanks for the help everyone.

Realgeni · Joined: 13 Apr 2009 Posts: 1434 99.76 Dollars($)

You can go to a conventional loan, but then the lenders may be looking for atleast 20% down, especially in this market.

Mikesz · Joined: 14 Apr 2009 Posts: 1 1.44 Dollars($)

Now my lender is telling me that the FHA mortgage insurance lasts the life of the loan and cannot be canceled without a refinance. Looking around on the internet opinions on the matter seem to be split down the middle. Where do I go for the real answer?

This is the form he is using. http://networkmortgage.web-loans.com/resources/forms/FHA-Consumer-Choi ce-Disclosure.pdf The only difference is the last sentance is missing on his. He is saying the second last sentance overides the 78% 5 year part in the first paragraph and we have to Pay MMI for the life of the loan.

Mike

gmakerley · Posted: Tue Apr 14, 2009 9:24 am Post subject:

there's an awful lot of lenders out there who have no sense at all. where is this guy coming from? that form is so archaic it barely resembles 2009 reality anyway.

your lender is wrong.

Realgeni · Joined: 13 Apr 2009 Posts: 1434 99.76 Dollars($)

Try some other lender.

Guest

Dear Everyone. Can you help me. I purchase a home using a conventional loan through Cendant Mortgage for $80000 in 2003. I paid on time every month and even paid several a lump payment of $6000 to get it under the 78% loan. I requested PMI removal. They denied saying that now the property values in the neighborhood have declined so badly that they will not remove the PMI. Can they do that? All the paperwork that I have says that they use "original value". How can they use the current value instead? The property is empty. I want to continue paying for it to keep my credit up, but I feel like they are taking advantage of me. What can I do?

gmakerley · Posted: Fri Apr 01, 2011 9:42 am Post subject:

Arlinda, if you have documentation stating that your MI is removable once you hit 78% of your original value, then you ought to stick to your guns and force them into making the change. Consult with an attorney on this, and take the time to threaten a lawsuit, or maybe even sue them, but stick to your guns.

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PMI removal based on initial price instead of appraisal

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