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Personal Loan to eliminate PMI

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Valued Contributor

Re: Personal Loan to eliminate PMI

I don't understand everyone's responses.
Unless I read it wrong the OP already has the mortgage (a 3.25% interest rate would suggest (s)he has had it for awhile) and is looking for ways to get rid of PMI without refinancing (I personally wouldn't want to refi a loan with 3.25%).
OP, I am assuming that you have a conventional loan (if you have a FHA loan your PMI will not go away unless you refi to conventional), you need to look closely at your loan documents. Most of the time PMI is automatically dropped when the LTV reaches 78% not 80% and frequently there is a minimum time before you can request that the PMI be removed. Also, your lender may make you pay for an appraisal to "make sure that the value has not decreased".
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Message 11 of 15
Super Contributor

Re: Personal Loan to eliminate PMI

Thank you Dragon... I think we all misread the intent here.

 

OP, verify... in writing... that paying down the mortgage will drop the PMI.  Once you have THAT in hand, execute the personal loan and save yourself the dollars!

 

Good luck!

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Message 12 of 15
Established Contributor

Re: Personal Loan to eliminate PMI

dragontears had a very good reply.

 

It took a while to understand what OP was trying to say,

 

but yes make sure you have a conv loan and 78% is prob the magic number, verify this.

 

OP wants to use loan to PREpay payments $13000. which will push out the payments, and will lower his/her principal.

However, this $13k is not going directly to principal due to ammortization (so keep that in mind)

 

with my WF mortgage, this is how it worked for me, but it was a bit diff scenerio as

I applied $X amount to principal and then hit the 78% way back when I did.

Since it was to principal, it DID NOT push back payment due date....however that was not my intent.

I had the extra to continue to make reg payments month to month etc.

It was also in the first year, so no new appraisal was needed, the % was off the appraisal done at purchase.

 

I would suggest to check with your WF consultant and see if your terms are at 78%,

and if new appraisal needs to be done,,,then do the math to see what is best for you.

There are some online mortgage calculators to see how much is saved etc.

 

I will congrat you on the 3.25% rate! that is super!

good luck



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Message 13 of 15
Established Contributor

Re: Personal Loan to eliminate PMI


@tcbofade wrote:

Thank you Dragon... I think we all misread the intent here.

I sure did, I thought this was pre mortgage planning / not post mortgage options

OP, verify... in writing... that paying down the mortgage will drop the PMI.  Once you have THAT in hand, execute the personal loan and save yourself the dollars!

+ 100, will save a lot of you can get that rate and amount.

 

Good luck!


 

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Message 14 of 15
Valued Member

Re: Personal Loan to eliminate PMI


@WhatTickaWhat wrote:

dragontears had a very good reply.

 

It took a while to understand what OP was trying to say,

 

but yes make sure you have a conv loan and 78% is prob the magic number, verify this.

 

OP wants to use loan to PREpay payments $13000. which will push out the payments, and will lower his/her principal.

However, this $13k is not going directly to principal due to ammortization (so keep that in mind)

 

with my WF mortgage, this is how it worked for me, but it was a bit diff scenerio as

I applied $X amount to principal and then hit the 78% way back when I did.

Since it was to principal, it DID NOT push back payment due date....however that was not my intent.

I had the extra to continue to make reg payments month to month etc.

It was also in the first year, so no new appraisal was needed, the % was off the appraisal done at purchase.

 

I would suggest to check with your WF consultant and see if your terms are at 78%,

and if new appraisal needs to be done,,,then do the math to see what is best for you.

There are some online mortgage calculators to see how much is saved etc.

 

I will congrat you on the 3.25% rate! that is super!

good luck


Yes, my apologies, in an attempt to keep my original post free of meaningless details, so it was easier to read, it appears I had done just the opposite.

I am 30 months in to the mortgage, at time of purchase the home was appraised below selling price, so my down payment was basically sufficient enough to obtain the mortgage but not at the 20% we had hoped. My wife and I decided that because the home checked all of the boxes that you can't "renovate" (acreage, barn, zoning and proximity) that we would deal with the PMI and try to pay down as quickly as possible.

I am not looking to have any payments pushed back, simply trying to reduce the cost I would have to pay for the privilege of having the mortgage. I'm grateful that we had the opportunity and understand what the PMI is protecting, I'm not disillusioned and feeling like I'm paying for no reason.

I appreciate the feedback and advice on this forum that has helped me tremendously over the last 3 years, so I came back in an attempt to put myself in a better position moving forward. I will gladly pay for a new appraisal as we have remodeled the master bed/bath and made some repairs noted in original appraisal.

I wanted the collective minds to help me understand whether or not the personal loan was a viable option to lessen my overall cost and move forward without a setback that I don't or can't see.

 

Thanks again for all of the replies.


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Message 15 of 15
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