Removing PMI
I seem to think that since about two years ago, the PMI could only be removed from loans by a reduction in the princple balance. It use to be that you could just get a new appraisal. Has something changed?
Brenda
Yesterday I spoke to the (running to fridge to look at bus. card) broker-in-charge, who I bought my house from.
She told me to talk to the bank that wrote the loan and get a copy of the appraisal and see if I was below the 80%. Apparently that is all that is needed. But then, you have to convince the lender to actually do it...
PMI is truly money down the hole, and in some ways it is a scam. Yet it is the assurance some lenders need to make a low down payment loan. The infuriating thing is it can increase your effective interest rate way up to loan shark rates (do the math!).
But by law (federal, I think) , if you reach 20% equity--whether through paydown or reappraisal--they have to cancel it, though you'll probably have to remind them and possibly advocate a little, especially in the latter case.
loon,
I regretfully disagree with you with regards to the lender being required to drop PMI simply because you owe less than 80% of value on the property. You generally have to provide an appraisal, which they can dispute the validity of, and may require you to provide another one by an approved apraiser of their choosing. Then you have to request that they drop the PMI requirement in writing. If you have credit issues, and/or have missed a payment etc, they can deny your request to drop the PMI.
Generally the 80% rule works, but not always.
Jeff
The bank I work for will drop PMI automatically at 78% LTV of the original value, or you can request an appraisal done by a staff appraiser and if your LTV is 80 or lower, PMI goes away.
Don't think prior payment history is of any consideration since the calculations are done purely on the property values and loan balances, however, perhaps some banks do consider it.
Hope this helps,
Vasiliy