cancel
Showing results for 
Search instead for 
Did you mean: 

How much longer do I have to pay PMI?

tag
Anonymous
Not applicable

How much longer do I have to pay PMI?

I bought my home July 2002.  The original balance was $112,750.  Purchase price was about $115k.  My principle balance is now $101k.   Since July 2002 I have been paying $45 per month for PMI through my escrow.   How much longer will I have to pay this?  I called the mortgage company a while back and they said that I would have to pay it for 5 years.  After the 5 year mark I called back and they said that I would have to pay it for 10 years.   Can anyone shed any light on this?
Message 1 of 9
8 REPLIES 8
MattH
Senior Contributor

Re: How much longer do I have to pay PMI?


@Anonymous wrote:
I bought my home July 2002.  The original balance was $112,750.  Purchase price was about $115k.  My principle balance is now $101k.   Since July 2002 I have been paying $45 per month for PMI through my escrow.   How much longer will I have to pay this?  I called the mortgage company a while back and they said that I would have to pay it for 5 years.  After the 5 year mark I called back and they said that I would have to pay it for 10 years.   Can anyone shed any light on this?

The law says nothing about years when the lender must drop PMI, the key factor is LTV, as described here so if you want to get out from under PMI sooner the only way is to make extra principal payments and get that balance down.

 

Note that while the above link is to the Wells Fargo site, any other lender will have similar rules because they are defined by Federal law.

 

Message Edited by MattH on 01-24-2009 12:19 AM
TU 791 02/11/2013, EQ 800 1/29/2011 , EX Plus FAKO 812, EX Vantage Score 955 3/19/2010 wife's EQ 9/23/2009 803
EX always was my highest when we could pull all three
Always remember: big print giveth, small print taketh away
If you dunno what tanstaafl means you must Google it
Message 2 of 9
Anonymous
Not applicable

Re: How much longer do I have to pay PMI?

Conventional or FHA matters................Now a-days with conventionaly I think it is 78%....
Message 3 of 9
MattH
Senior Contributor

Re: How much longer do I have to pay PMI?


@Anonymous wrote:
Conventional or FHA matters................Now a-days with conventionaly I think it is 78%....

 

With conventional the lender is required by law to let the borrower drop PMI when the principal drops below 78% of the original purchase price, that is correct.  With FHA the rules have changed several times recently so the applicable rules will depend on precisely when the loan was taken out, because the FHA premiums have become something of a political football.  Also with FHA some of the premium gets paid up front and some gets paid during the loan term, whereas with PMI on a conventional mortgage the premium is entirely paid during the loan term.  Since part of the premium for an FHA loan was paid upfront at the time of purchase and is therefore sunk money, the savings to the borrower of paying down principal will of course be smaller: the up front premium is sunk money.

 

Oddly enough, for a conventional loan that is above 80% LTV but not too far above 80% LTV the rate is usually a little lower than for a loan that is below 80% LTV because the lender is taking on less risk when there is a PMI insurer involved.  Of course the PMI will cost more per month than this rate differential.  However, for a borrower with excellent credit and ample cash the sweet spot may well turn out to be putting a little less than 20% down initially on a conventional mortgage (to get the best rate, at the cost of having PMI), then making extra principal payments over the first year or so and thus getting LTV below 78% (to drop the PMI).

 

TU 791 02/11/2013, EQ 800 1/29/2011 , EX Plus FAKO 812, EX Vantage Score 955 3/19/2010 wife's EQ 9/23/2009 803
EX always was my highest when we could pull all three
Always remember: big print giveth, small print taketh away
If you dunno what tanstaafl means you must Google it
Message 4 of 9
marty56
Super Contributor

Re: How much longer do I have to pay PMI?

I am paying $88Smiley Mad PMI each month and I will be at 80% LTV in Nov which is 8 years early.  The home should be PIF in 5 years since I'm paying $1150 extra to principle each month.  Im going to role the $88 into the principle.
1/25/2021: FICO 850 EQ 848 TU 847 EX
Message 5 of 9
DallasLoanGuy
Super Contributor

Re: How much longer do I have to pay PMI?

78% of original loan.

unless you get a n appraisal and petition to lower it

 

also, dont think of pmi as a penalty. i know it sux to have to pay it, but it gave you the cheap interest rate you have.  :smileywink:

Retired Lender
Message 6 of 9
Anonymous
Not applicable

Re: How much longer do I have to pay PMI?

Huh?  If you have PMI you get cheaper interest rates?  So should I put down 19% to get a lower rate and only have to pay PMI for a minute?

 

 

Message 7 of 9
DallasLoanGuy
Super Contributor

Re: How much longer do I have to pay PMI?


@Anonymous wrote:

Huh?  If you have PMI you get cheaper interest rates?  So should I put down 19% to get a lower rate and only have to pay PMI for a minute?

 

 


not exactly.
sorry for the conusion.
 what i mean is, the fact that pmi is on the loan, the lender doesnt have to charge a higher rate for risk.
 

 

Retired Lender
Message 8 of 9
Anonymous
Not applicable

Re: How much longer do I have to pay PMI?

Ohhhhhhh. Gotcha. Sorry about that. I totally misunderstood!
Message 9 of 9
Advertiser Disclosure: The offers that appear on this site are from third party advertisers from whom FICO receives compensation.