Profile picture for Polo2005

Declining value impact when I can drop PMI?

I have paid down my mortgage to the point where I am now at an 80.1 % LTV.  It is my understanding that at 80% I can ask that the PMI be dropped and that it has to be dropped once I reach 78%.  I have not had an appraisal but I know the value of my home has dropped significantly, so what I have paid probably does not equal 19.9% at today's value....  Is that going to mean that I have to keep paying PMI for several more years (or until the value of my home increases again)?
  • February 20 2010 - Cranston
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Answers (8)

Profile picture for Justin Kennedy
Polo, Is your loan insuredd by a private ocmpany or thru a goverment program: ie fha, va, usda. if a private co. this link may help you. You will need to contact your mortgage insurance company and follow thier system of removal.
  • February 20 2010
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Good link Justin. .... Happy funding, Rudi
  • February 20 2010
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Profile picture for Texas Banker
Having a full appraisal done and submitting it to your lender will drop the PMI.

Call your lender to find out what their policy is.
  • February 20 2010
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If you know the value has declined then paying for an appraisal would be a waste of money. Determine the 78% LTV point and ask your lender if the MI will be removed once you hit that mark, per the Homeowners Protection Act. BTW, in what year did you purchase the property, purchase price, and current balance?
  • February 21 2010
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The Mortgage Insurance company does not cancel the insurance...Your lender and only your lender can cancel your mortgage insurance.  Talk to your lender and ask them what you need to do to cancel mortgage insurance.
  • February 21 2010
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Profile picture for Polo2005
Thanks, all. I have called the lender (I'm insured by a private company), and a package with their requirements is in the mail, but I do not want to pay for an appraisal that would be a waste of money, as Clay says.

Clay, I purchased in July 2004 for 194,000. Current loan originated in Nov 05 for 221,000.  I've paid it down to 208,000.

House appraised (by the city, for taxes) about a 18 months ago for 173,000 and various online sources now put the value between 160-165,000.

I have no idea how accurate those online sources are, but I do have a real certain feeling that the value has certainly dropped from the 194,000 I initially paid.  So given this, I'd bet that I have no shot of getting the PMI dropped at 80%, despite my good payment history and lack of other liens on the property...?

I guess I was just hoping that there would be a ray of hope for me on this long shot!
  • February 21 2010
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Not knowing how you refinanced for $14k more than the purchase price in '05, it is hard to determine the drop point. Call the lender and ask what the balance needs to be to reach 78%. I suspect it will be at least $26,000 more in principal reduction.

  • February 22 2010
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Profile picture for Polo2005
The value of the house two years ago was $267,000, and it was in the 240s when I did the refi

Thanks for all the help!
  • February 24 2010
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