Question about getting rid of PMI insurance

June 26, 2012 3:52 PM

In order to get rid of PMI insurance. Do I need to pay it down to 78 percent of original loan amount? or 78 percent of the amount my house is worth at the moment? I have seen both as answers and can't seem to find a definitive answer. CA is my state.
posted by couchdive to home & garden (9 answers total)

Depends on your lender. Call them up!
posted by amanda at 3:56 PM on June 26, 2012

While it isn't called PHI, FHA is 80% of the current value, available after 2 years.
posted by bensherman at 4:03 PM on June 26, 2012

Yeah, depends more on your lender than your state. Check the terms of your mortgage. PMI isn't a legal requirement as much as a contractual one.
posted by valkyryn at 6:12 PM on June 26, 2012

If you have your mortgage paperwork, it will say on the Note. We just refinanced, and it's guaranteed that the PMI goes away after we owe only 78% of the mortgage amount, and we can petition the bank to have it removed after we hit 80%.

We're not in California, though. (It doesn't make sense that the actual value of the house would have anything to do with it, because you still have to pay back the amount you financed! But maybe things are different in California.)
posted by leahwrenn at 6:29 PM on June 26, 2012

It depends -- is it an FHA loan? I asked a similar question a few weeks ago. For an FHA loan "the annual mortgage insurance premiums will be canceled when the Loan to Value ratio reaches 78 percent, provided the mortgagor has paid the annual premium for at least 5 years."
posted by murfed13 at 7:47 PM on June 26, 2012 [1 favorite]

I asked about this when I financed my house and the rules in my specific case were that I could refinance when the amount owed was less than 80% of the appraisal value of the house, or I could wait 10 years for the PMI to expire. There was no other option for removing it. I am in California.
posted by tylerkaraszewski at 8:58 PM on June 26, 2012

is this an FHA loan or is it conventional? big difference. i suspect FHA because you wrote 78%, but please confirm.
posted by smalls at 9:25 PM on June 26, 2012

I have a conventional loan.

From the NOLO site I found this; and this begs my initial question. So if a I pay down to 78 percent of initial loan amount can I cancel, even if slightly underwater?

(background) I have had a conventional loan for 3 years, I aggressively pay extra on it and in the next year or so sill be at or below 78 percent of original loan amount, but my house also lost value to about what I currently owe on it in that time as well.

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http://www.nolo.com/legal-encyclopedia/private-mortgage-insurance-pmi-30108.html

"When the Law Requires a Lender to Cancel PMI

Some baseline rules about cancellation were established by the federal Homeowners' Protection Act, which applies to people who bought their homes after July 29, 1999. The Act says that you can ask that your PMI be canceled when you've paid down your mortgage to 80% of the loan, if you have a good record of payment and compliance with the terms of your mortgage, you make a written request, and you show that the value of the property hasn't gone down, nor have you encumbered it with liens (such as a second mortgage). If you meet all these conditions, the lender must grant your request to cancel the PMI.

What's more, when you've paid down your mortgage to 78% of the original loan, the law says that the lender must automatically cancel your PMI. But don't count on the lender to notice -- keep track of the date yourself. Unfortunately, it may take years to get to this point. Thanks to the wonders of amortization, your schedule of payments is front-loaded so that you're mostly paying off the interest at first.""
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posted by couchdive at 11:44 AM on June 27, 2012

Marked some as best answer. Thanks all. Still hoping for more info if there is a someone out their with experience. Can't seem to find a clear and authoritative source for info of the Homeowners protections act listed above.
posted by couchdive at 9:53 AM on June 28, 2012