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why are we paying a PMI on a home purchased at 180k with a down payment of 100k ?

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January 06 2010 - Pueblo West
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You know that I love that so many mortgage professionals keep calling fha mortgage insurance "PMI"

"PMI" stands for private mortgage insurance. There is nothing private about paying the government mortgage insurance.
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January 07 2010
Snagit22..... I wish you would answer the request Bob made on what your credit score was when you obtained the loan.  It would take away the quess work and an accurate answer could be given. In any event this is a good example of how this forum can work effectively as consumers and lenders can be educated and enlightened.  On Carl's behalf Bob, thank you. 
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January 07 2010
Bob's got it, and it's a shame there are so many incorrect answers on this thread.  Be sure to contact your lender for explanation. We don't have all your details in order to give you a solid answer.
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January 07 2010
snagit, the only reason you should go with a FHA loan with that much down payment would be because of a low credit score.  If your score was below 620, you probably could not qualify for a conventional loan without PMI. 

There are pretty significant pricing adjustments for scores less than 680, however, it would not make sense to pay UPMIF and MMI. 

Can you tell us what your credit score was? 
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January 07 2010
"Every FHA loan has an initial PMI payment, if you are paying monthly it will cease once you have paid the 1.75% of the loan, if you payed it up front then it is a one time payment and you should not be paying it at all.
It is also refundable in case of sale, or overpayment. This should stop at 80% or at 1.75 % of the loan amount if not, do not call your lender write them and request a statement and review of PMI premiums."

Huh?  Carl, where are you getting your information?  Have you ever done a FHA loan?  So many things to correct:

1.  MMI or MIP is removed once the loan is paid down to 78% of the original sales price or market value.  With a FHA loan, MMI will be on the loan for at least 60 months. 

2.  MMI is not removed once you are at 80% or at 1.75%.  I dont't even think that statement makes sense.

3.  All 30 year FHA loans have Up front MIP and MMI (MIP).  Only 15 year loans with 10% down do not have MMI.

4.  It is not refundable in case of sale or overpayment.  It is only partially refundable if they do a FHA streamline within 36 months of the original loan.

Here is a link with more guidance:

More guidance
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January 07 2010
Every FHA loan has an initial PMI payment, if you are paying monthly it will cease once you have paid the 1.75% of the loan, if you payed it up front then it is a one time payment and you should not be paying it at all.
It is also refundable in case of sale, or overpayment. This should stop at 80% or at 1.75 % of the loan amount if not, do not call your lender write them and request a statement and review of PMI premiums. FHA requires that FHA certified lenders are transparent with their serviced consumers.
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January 07 2010
If the applicant hasn't good credit, He/She will apply for the FHA loan, and every FHA loan (as my knowledge) has the PMI.
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January 06 2010
Doesn't make any sense to me.  PMI is normally only paid when you have less than 20% equity in the home at time of purchase.  Are you current on your loan?  If so, I'd call your lender immediately and ask why you are paying this.
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January 06 2010
Wouldn't this be a question to have been asked PRIOR to accepting this type of mortgage? "Day late and a dollar short" will be costly! .... Best wishes, Rudi
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January 06 2010
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Sounds odd.  What does your lender say? 
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January 06 2010
 
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why are we paying a PMI on a home purchased at 180k with a down payment of 100k ?
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Latest answer by Anthony VanDyke
January 07 2010 | 10 answers
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