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Getting rid of PMI

I purchased a home on short sale in October of 2009.  During the purchase, they appraised my house at the offer price - which I was told was fairly standard.  I purchased the home for $40,000 less than it was purchased for in 2007.  I put 10% down on my home, which was $31,700.

I'm in a position to pay additional principle to my mortgage each month to build more equity.  I'm trying to figure out how long I should do this before I have my house re-appraised to get to 20% equity.

I think in 1 year, I can pay an additional 5% into my mortgage, and am hoping that it will assess at 5% higher than I purchased it.  The Zestimate is already more than 5% higher than my purchase price, but I'm unclear how accurate it is.  Any advice how long I should wait in this market.  I got a pretty sound interest rate (5%) - so I was hoping to not refinance, and just call for a new appraisal.

Thanks
  • March 25 2010 - Vancouver
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Answers (5)

Another thing... if that's a 5% fixed rate ???  Keep it. Rates are starting to go up and not come back down for a long time.
Good Luck
  • April 05 2010
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Profile picture for melissanemeth29
Thanks.  I read my loan documentation in October last year, and don't remember the 2 year part - but that doesn't mean it isn't there.  With the houseing market just starting to come back, my biggest concern is what my home will appraise for, and I'm looking to build confidence to make sure I'll have enough equity before I call for a new appraisal.  I was thinking of trying to do this in June of 2011, but it sounds like it's smarter to wait until October, based on the consistent "most places say you must wait 2 years" answer.

Zillow currently "zestimates" my home favorably - and if it's fairely accurate, I shouldn't have much problem getting rid of PMI next fall.
  • April 01 2010
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Rule of thumb is normally two years and 78%. But you will need to get an appraisal to prove it. The Federl goverment has guidelines for this as does the investor (your mortgage lien holder). The investor's guidelines will be in your loan documents you got when you signed your loan. Look through that paperwork.
If you can't find that paperwork, call the loan originator that did your loan and ask for a copy. They should have copies of your loan package.
Good luck.
  • March 31 2010
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Take Martin's suggestion. I have only one item to add - at the time you signed your loan documents there should have been a PMI disclosure form that details exactly how the PMI can be removed.  You might want to dig that out as reference before you talk to your lender in case they try to tell you something different than what you signed.
  • March 25 2010
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Normal timeframe required for most lenders to consider MI (that is what it is really called in the industry as there is a company called PMI as well), is 2 years.  Your servicer (lender) is the one that grants the request and covenants you must meet.  Here is a link that may help shed some light as to the process.  Just remember, it is the LENDER that controls it and not the MI company.  Good luck to you and No, I would not refinance.  If you do not prepay the original mortgage down manually, be prepared to pay for an appraisal.... and be prepared... for anything.. Most people are very saddened by HVCC appraisals as it is very sobering.  Doing your homework is a great start. For the record, my spouse works for an MI company.  Good luck to you. :)
  • March 25 2010
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