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.

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

Ask Kate at
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,

Ask Kate

Finally! PMI Answers You Need

What Is PMI - Could private mortgage insurance be your solution to equity and down payment problems? 2013 Update: Deductible mortgage insurance premiums.

Updates on HARP 2.0 Refinance with Borrower and Lender Paid Mortgage Insurance - PMI and LPMI.

Could you be entitled to a mortgage insurance refund from FHA?

How do lenders calculate PMI? Credit history, amount of down payment or equity, occupancy status, and loan type factors.

How Do I Cancel PMI Will refinancing or a new appraisal be required?

What to do if PMI Decision Making is getting in the way of refinancing or buying a house.

My name is Kate and I will be your guide - PMI Questions and Answers

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How to get rid of PMI
by: Lynn

I purchased my home in 2007 for $159,900. Although the PMI is only $70 a month, I am still paying it! I wrote to my mortgage company and was told that the current LTV must be below 80%. The balance on my loan now is $137, 473.

And also told no newer appraised values will be considered. My home is now only worth around $118,00, and I am also required to pay back the first time home buyer's tax credit of $7500 ($500) a year. This just doesn't seem fair.

I figure I have another $12, 751 before the PMI will be removed. Is there any other way to get it removed?

Hi Lyn, Kate here.

There are several very methodical ways for getting rid of private mortgage insurance. Go to How Do I Cancel PMI? to see the rules which lenders must follow.

If you feel that your lender is not being honest with you, contact your state's attorney general to file a complaint.

Best wishes, Kate

PMI Removal
by: dc

After months of trying, my nationwide lender finally sent me a letter explaining the requirements for PMI removal in California. The magic number is 75 percent of the original appraised value in the state of California.

California has a law on the books that states this. Even with the letter, it was difficult to get them to remove PMI after paying down the mortgage with hard cold cash to meet the 75 percent of the original appraisal at closing.

Because I had the letter, they finally removed the PMI. California civil code 2954.7 and 2954.12 cover PMI removal..

Removing PMI
by: Kevin Tinsley

Google search the Homeowners Protection Act, Send your lender the pamphlet that says the lender Must drop the MI once you pay down your loan to the original value of your home when you purchased the property. Hire an attorney to help if needed.

How can I get the check I sent to my bank?
by: Chris

Hello Kate: I sent a letter stating that I want my check for $40,000.00 back. I did not receive a response yet for a week. What is the possibility for them to return the check?

I see that they applied it to the principal. What other ways can I get this money back or it is a done deal? Thanks, Chris

Chris, Kate here. I'm sorry to hear of your difficulties. I think if you are willing to make a big enough fuss, you have a chance of getting back the money. But put everything in writing. Everything.

Interestingly, your bank (I purposefully omit the name of banks) has put a halt to its foreclosures this week. So if it has the ability to postpone foreclosures in order to inspect its practices, surely it also has time to take care of you.

Please keep in touch, Kate

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