I am on a quest to eliminate my mortgage PMI

In this day and age you probably already know what PMI is and you are probably paying it. It stands for "private mortgage insirance" and it is an extra payment that you pay to the bank to ensure that you won't default on the loan. Unless you put 20% down when you bought your house then you are paying it. I pay an extra $290 per month for mine and I am on a quest to get rid of it.  Banks are notorious for trying every trick in the book to keep you paying that PMI. The first hurtle... the invisible PMI Office!!!

Try this: call your mortgage lender and ask to be transfered to the PMI Office. After the snarky rep stops laughing she'll tell you that they can only be contacted in writing. She'll give you the address but she'll swear that they don't have a phone. Of course the address is a PO Box number. Honestly, for all the money that you give them they ought to be required to have a phone!!!

In order to eliminate PMI you have to either have paid down the loan to 80% loan to value (LTV) or have the house appraised to see if it went up in value. Of course, they pick the appraisers. Isn't that special? Since my house is not quite at 80% then I'm going to look into getting an appraisal to have them raise the value. All that I want is a list of the appraisal companies that they use. I don't have high hopes in them giving me this information. What I expect them to say is that they will send me that list after I send them a check.

Another way to eliminate PMI is to refinance the loan. But since closing costs are in the thousands then I am going to try contacting them first.  I'm at the point now where the reappraisal is cheaper than refinance. However, I will have to refinance anyway soon since I have a variable interest rate.

I'll keep you readers up to date as things happen and maybe this can help some of you too if you are trying to get rid of your PMI.

Thanks!!

Mortgage PMI Elimination Update

I did some more research. PMI is attached to all FHA loans. This stands for Federal Housing Administration. I guess my mortgage is an FHA loan. They are not a lender they are an insurer. So if you put less than 20% down then it is an FHA loan and you are paying that PMI and they want you to pay that for as long as possible because that is how the FHA makes its money.

There don't seem to be any clear cut rules as to how to get rid of it if you have an FHA loan. It is up to the discretion of the lender.

Well, here are the ways the law says you can get rid of pmi:

1. You can get your house reappraised (by using one of their appraisers) and maybe they'll say ok (doubtful).

2. You can pay down the loan to 80% and then "request" they take it off. Again, I've read enough blogs where this didn't happen so again (doubtful).

3. You can wait for the date when it will be scheduled to be at 80% loan to value and then, again, kindly request that they take it off. Again, doubtful. I've read enough blog posts where the mortgage company says that you have to have the house reappraised anyway to show that the house didn't drop in value.

4. The last way is to wait until the mortgage is "scheduled" to be 78% LTV. They will give you this date over the phone. My date is an entire year after my loan is scheduled to reach 80% LTV.

So, here is what I think their game is...they drag their feet every step of the way, from responding to a request to have it removed to getting it appraised and responding to an appraisal. In the mean time you keep paying that PMI and you get closer and closer to the scheduled 78% LTV date anyway when they are required to take it off.

Yeah, don't argue with me on this, I'm pretty sure that's the game. I've worked for insurance companies before and it doesn't matter what type of insurance you are dealing with, they all drag their feet as long as they can legally get away with it to postpone paying claims or in this case, stop collecting premiums from you. That's why when you file an insurance claim and they put it "under review" there will be some language in the letter that you get that says that they are "allowed" that time to review. They don't need that time they are just dragging their feet.

I think that I am going to look in to refinancing this house to get away from the FHA loan.  However, this story isn't over yet! Because, I have a rental that is under water and which I am also paying PMI. So I will be trying to get rid of the PMI on that.

Stay tuned!!