Questions about PMI

[User273165]

Hello everyone,

I bought a home in Dec of 2012. I purchased the home for $156,300 and my original loan amount was $153,468.  When we purchased the home it was appraised at $180,000.

I am trying to figure out when I can get rid of my PMI.  I know everyone says when you have 20% equity, but is that 20% of the appraisal or 20% or the sale price or loan origination?

Also, has anyone ever taken out a second mortgage, refinanced, etc to get rid of PMI in any way?

It is costing me a substantial amount of money becuase I was too stupid to put 20% down.

Any help would be greatly appreciated.

Thanks all.

[tooleman694]

Since you score so high, you could refi conventional and pay the up front PMI fee.

[Autumnslight]

I'm going to assume you mean conventional, not FHA? It varies by lender, but you can usually request that PMI be removed after 24 months of timely payments AND once you hit a principal balance of 80% of the original value. Original value is the lower of the appraised value or the purchase price. If you purchased a house for $100,000, which was appraised for $110,000, then you can request removal at a principal balance of $80,000. If you purchased a house for $100,000, which was appraised for $90,000, then you can request removal at a principal balance of $72,000.

Since you purchased so recently, you probably don't have a lot of options to get rid of the PMI. You might be able to refinance and use a new appraised value to get rid of it, but even then I think the original purchase usually needs to be at least a year ago for them to use a new appraised value instead of the original purchase amount.

A mortgage broker should be able to answer this easily and figure out the best option for you.

[Davidngo]

I believe with FHA the required time frame is a minimum of 60 months of carrying PMI

[tooleman694]

Conventional you can get out of it the day you close, if you do LPMI

[JM-AM]

It is based off the lower of the purchasing price or appraisal at time you closed loan. So if the home was appraised at 180K, but you paid 150K, then it is based off the 150K. So when your loan has a balance of 120K then you can request to have PMI removed.

You can refinance your loan and if it is appraised with 80% equity you wouldnt have to pay the PMI any longer. If it isnt appraised with 80% equity you can put down the difference to be at 80% equity when you refinance, but that would be a choice you make if you would even want to refinance then.