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Conv PMI question

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Conv PMI question

Applied for a conventional loan thru a broker builder. Home will appraise around 330k, I am putting 10% down. House is being discounted 33k so btwn the discount and my down, i will owe less than 80% of the homes worth at close. The broker couldnt tell me how long I will have to pay mortg insurance. Does anyone on here have any more insight? I was really disappointed the loan ofc couldn't be of more help.
Message 1 of 6
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Frequent Contributor

Re: Conv PMI question

LTV is based on the lesser of the sales price or appraised value. Discounts to sales price do not help your LTV. Either pay an additional 11% to get under 80% LTV or refi. Refi LTV uses the appraised value of the home instead of the sales price.

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Message 2 of 6
Valued Contributor

Re: Conv PMI question


@work_n_progress2 wrote:
Applied for a conventional loan thru a broker builder. Home will appraise around 330k, I am putting 10% down. House is being discounted 33k so btwn the discount and my down, i will owe less than 80% of the homes worth at close. The broker couldnt tell me how long I will have to pay mortg insurance. Does anyone on here have any more insight? I was really disappointed the loan ofc couldn't be of more help.

Hi Work_n_progress2,

 

A rough number is 78 months. This is based on a purchase price of $297,000 with 10% down. The PMI cancels once you've paid down your principle balance to 78% of your original purchase price. This DOES NOT take appreciation into account so you maybe able to get it cancelled sooner for the cost of an appraisal.

 

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Message 3 of 6
Established Contributor

Re: Conv PMI question

So in theory if you get your house appraised at any time and its worth is 80% of the loan then you can demand they drop the PMI.. 
or do you have to refi to full this one.

 

I'm seeing alot of appraisals (like mine) come in at the loan amount which seems very weird.

 

This is interesting

Refi LTV uses the appraised value of the home instead of the sales price

Makes you want to refi ASAP. Too bad its so expensive.

 

I am thinking of refi into a penfed 20 year ASAP if that is the case.

Not closed yet but .. soonish

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Message 4 of 6
Moderator Emerita

Re: Conv PMI question

Wait at least 6 months IIRC after you close to refi so they don't use your purchase price.  Better yet, ask your proposed new lender how long you have to wait in order for the new lender to use the (new) appraised value rather than the purchase price.

Message 5 of 6
Super Contributor

Re: Conv PMI question

i seem to remember that pmi remains at least 2yrs.  i might be wrong on that.

you can refi after 12 months and use new value

 

Retired Lender
Message 6 of 6
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