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PMI Help?

I am looking at purchasing a home on a conventional 30 yr.  Not FHA.  Only putting down 5%, so will have to pay PMI.  It's a foreclosure, so getting it at a steal, below 80% of the value of the home.  Question is, when can I ask the mortgage company to drop the PMI from the loan?  12 months?
  • November 20 2013 - Chattanooga
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Answers (5)

PMI only goes away if your initial loan is 20% down of your own money.  New regulations require that PMI is part of the loan for the life of the loan unless you refinance.
  • November 26 2013
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There are some lenders that can do a 5% down conventional without PMI. You just have to find to right lender and have your finances in place to allow this. You should contact your lender to see how long before you would be allowed to refinance to get rid of the mortgage insurance. Well I hope this helps and good luck!
  • November 20 2013
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Contact your lender and ask them the same question.  You will receive an answer tailored to the type of product you are using.
  • November 20 2013
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Profile picture for bdneenm
Joseph is right. Unless you are putting 20% down you still have to pay PMI. You can request that the PMI be removed when you hit roughly 78% loan to value ratio, which could take several years. You also have the option to do an upfront PMI, where you pay the PMI costs upfront, if you believe that cost will be less than the amount you would have paid in PMI for all the years required to get to the 78% ratio. I would recommend talking to your lender to discuss your options. 
  • November 20 2013
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This is a question you will have to ask your mortgage provider.  The terms will be in the loan agreement.

In general for conventional loans the rules are:

Cancelling mortgage insurance is always based on the percentage of current principal amount vs. original purchase price.  Current appraised value does not factor into mortgage insurance cancellation.  Borrowers with conventional loans can request to have their mortgage insurance cancelled once their principal amount reaches 80% of the original purchase price.

However, many banks will have overlays or rules that are different than the above.  Ask your lender.
  • November 20 2013
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