Getting Rid Of PMI

by Chris from Chicago, Illinois USA

Chris asks Kate about problems getting rid of PMI: Hi Kate, I did a terrible mistake by sending $40,000 to my lender to get rid of my private mortgage insurance. Now the bank wants $95,000 to cancel the PMI. I have my mortgage now for 19 months. I put down only 10 percent and have a PMI of $215.00 monthly.

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Chris continues... My lender said I can cancel PMI by paying down 80 percent LTV (ratio of loan to value) and current value of house.

So I sent a check of $40,000 to get 80 percent LTV. They required BPO (broker price opinion).

The BPO stated my unit is worth only 340k vs. the 463k purchase price. Now my LTV is 108.22 percent and they require me to pay down the principal to $272.

I cannot come up with $95,000.

I did a terrible mistake by sending the 40k check. I did not pay attention to the current value. I foolishly believe they would be happy to cancel PMI since I'm sending a big check to bring loan to 80 percent and have not missed a single payment.

What are my options? Do I have to wait until my property increased in value to get rid of PMI? It so disappointing that I payed down my original value 80 percent LTV but it was not good enough because property depreciated.

Now I'm afraid I have to pay $215.14 PMI for a very long time. I did a very stupid mistake which will cost me a lot money. The one thing it hurts the most is that I wanted to get rid of PMI but I prolonged it.

Kate Answers: Problems Getting Rid of PMI

***zz-portrait-left.shtml*** Dear Chris,

When I was a kid, we moved from Illinois to California in December. The ocean was cold but we were so excited and charged in. Distracted by the fun, we turned our backs and got whomped by waves. We never made that mistake again.

Chris, you just got whomped. And I doubt you'll ever send a lender $40,000 over a verbal promise again. But what should you do now?

In Writing In Writing In Writing

Ask for your money back. Don't sit on this. The longer the bank holds onto your money, the more they will think it belongs to them.

And never send a bank money without first getting an agreement in writing.

How Lenders Calculate PMI

I have also included more private mortgage insurance help later down this page such as How Lenders Calculate PMI.

Chris, one more thing. I'd like to hear back from you. Let me know how this turns out by Commenting here on Getting Rid Of PMI.

Or Ask Kate another question here.

Best wishes,

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