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57 votes

Is there any reason a person would voluntarily choose to have PMI?

Private mortgage insurance protects the lender if you stop making your mortgage payments. It does not benefit the borrower, aside from the fact that many lenders require it if your down payment isn't ...
Nuclear Hoagie's user avatar
25 votes

Is there any reason a person would voluntarily choose to have PMI?

The best way to understand insurance policies in general is to consider who gets paid, and under what circumstances. Simply put, PMI policies pay your lender. The condition under which they pay is if ...
dwizum's user avatar
  • 17k
21 votes
Accepted

House Purchase: Pay student loans or put 20% down?

There are times that the simplest explanation (or analysis) is best. You show that, for a time, the PMI is $1812/yr. And it's the cost you will incur by sending $15,000 to the student loan instead ...
JTP - Apologise to Monica's user avatar
18 votes
Accepted

Deciding on a correct down payment for a house

Short answer: It probably makes sense to avoid the PMI (Private Mortgage Insurance), but it ultimately depends on how probable it is that you are unable to pay the monthly installments with/without ...
Svetkovski's user avatar
10 votes

Put down only 10% or put 20% down and pay a family member back the other 10% at 2.99% interest rate?

I cannot put down more without depleting my savings. Should I ask my dad for a $35K loan (with 2.99% interest) in order to avoid PMI? The bank will want to know about this loan. They will factor this ...
mhoran_psprep's user avatar
9 votes
Accepted

Do I need to remortgage to get rid of PMI?

If this is your primary residence, it is not true. As specified in the Homeowners Protection Act: At 80%, if your account is in good standing, you can show that the value of the property has not ...
Magua's user avatar
  • 5,097
9 votes

When is it 'ok' to borrow from a 401k to purchase a house?

The risk in taking a large 401K loan comes from the speed of what one must repay the loan if one changes jobs. This can happen by choice, or not, and the risk has been substantially lessened with the ...
Pete B.'s user avatar
  • 76.7k
9 votes

How do I get my lender to remove PMI from my loan?

[Assuming U.S.] If you have a conventional/private mortgage, PMI must automatically be removed when your loan-to-value (mortgage principal/home value) is scheduled to reach 78% based on the original ...
Stan H's user avatar
  • 7,551
7 votes

When is it 'ok' to borrow from a 401k to purchase a house?

I recently looked into a 401(k) loan for a house purchase, though I ultimately decided against it. While I'm not a finance expert, I did consider a few things which impacted my decision and which ...
Upper_Case's user avatar
  • 1,558
7 votes

Why was my request to discontinue PMI denied?

You don't have PMI, you have MIP. FHA loans are different than conventional loans. Their paragraph explains it pretty well, they use the sale price or appraised value when you bought it and will not ...
Hart CO's user avatar
  • 70.5k
6 votes
Accepted

Does the official county appraisal count for PMI calculation?

Usually, if you want to remove PMI prior to the regularly scheduled fall-off, you will need to pay for a new appraisal. The reasons for this are: (This point is strictly conjecture:) From the bank's ...
TTT's user avatar
  • 47.2k
5 votes

When is it 'ok' to borrow from a 401k to purchase a house?

Dividends, interest and capital appreciation via investments are "free money", given to you by someone else (or the Market Gods). But the interest "gained" via paying yourself back ...
RonJohn's user avatar
  • 50.7k
5 votes
Accepted

If buying a home for less than it's valued will I need a downpayment?

If we get a loan from the bank for $250,000 to purchase a home valued at $315,000 will they require us to provide a 20% downpayment or pay for private mortgage insurance? You can use gifted ...
Hart CO's user avatar
  • 70.5k
5 votes

Is there any reason a person would voluntarily choose to have PMI?

There are two reasons I can think of, but they both boil down to the reason that lender will give you a mortgage with PMI, and won't approve a loan without it. Assuming the lender requires PMI for all ...
yoozer8's user avatar
  • 9,513
5 votes
Accepted

Cancel PMI at 78% or at 75% if Fannie Mae

You're right that federal law does require termination for PMI at 78%--however, as with many laws, there are exceptions. 12 USC 4902 requires the cancellation of "private mortgage insurance" on or ...
Guest5's user avatar
  • 1,324
5 votes

Canada's new mortgage laws

In October 2016 four changes were made to the mortgage rules stress tests [*] for qualification now apply to everyone, not just those with less than 20% downpayment to get government backed mortgage ...
Kate Gregory's user avatar
  • 13.2k
4 votes
Accepted

How to calculate value of paying down mortgage and removing PMI vs higher interest debts?

Calculate how much you will end up paying total in each case, and compare. The "end" here is when you have both paid off the high-interest debt and payed down the mortgage to PMI removal. The numbers ...
yoozer8's user avatar
  • 9,513
4 votes
Accepted

Can the PMI be dropped without refinancing based on home value increase?

The Homeowners Protection Act of 1998 lays out the minimum standards for mortgages in relation to PMI cancellation. There are two ways it can be cancelled: automatic, and borrower-requested. ...
Joe's user avatar
  • 35.8k
4 votes

Does PMI removal effect homeowners insurance?

Generally insurance is based on replacement costs, not the value of the property. So if your property is valued at 650K, but to replace it you'd only need to spend 200K on cleanup of debris after fire ...
littleadv's user avatar
  • 176k
3 votes

Can I get my home reappraised to eliminate PMI payments earlier?

You would need to check with the bank, it may be that they would only trust an appraiser they sent themselves. But yes, in general as long as your LTV is below 80% you should be able to get rid of the ...
littleadv's user avatar
  • 176k
3 votes

Is there any reason a person would voluntarily choose to have PMI?

The benefit to the homeowner is that they get to buy the house with a lower downpayment than they would otherwise need. So to make up a case where you might reasonably want to pay PMI... Say it's ...
jamesqf's user avatar
  • 11.1k
3 votes
Accepted

If I take a home equity loan out can it "add" PMI to my mortgage?

I am self answering as I've worked this all through. Taking out a HELOC (Home Equity Line of Credit) on my property will not add PMI back to my mortgage My local Credit Union is willing to provide a ...
Shrout1's user avatar
  • 151
3 votes
Accepted

How does monthly PMI payments are calculated?

If you got 0.25%, sure. But you're much more likely to get 0.5% or 1% or even more. Bankrate suggests 0.3% to 1.5% as a reasonable range, for example. The banker is probably quoting you a common ...
Joe's user avatar
  • 35.8k
3 votes
Accepted

Confusion about PMI payment on FHA

I disagree with the other answers. Until proven otherwise, I believe you are correct and your friends are mistaken. (And the fact they claim the insurance is gone after just a few months strengthens ...
TTT's user avatar
  • 47.2k
2 votes

How does monthly PMI payments are calculated?

From my understanding of PMI payments, if one to take a $400,000.00 mortgage loan, with PMI rate of 0.25%, then the annual PMI payment should be: The calculation is right if the rate is 0.25%. ...
Dheer's user avatar
  • 57.1k
2 votes

House Purchase: Pay student loans or put 20% down?

Congratulations on your bonus may many more come your way. I am having a bit of trouble following your numbers but it seems you are considering PMI for the life of your loan. Once you get below 20% ...
Pete B.'s user avatar
  • 76.7k
2 votes

PMI removal with LTOV <78% and decreased home value

PMI must be removed when LTV is scheduled to hit 78% based on the original value of the home and the original amortization schedule (Automatic Termination). At 80% LTV based on current value you may ...
Hart CO's user avatar
  • 70.5k
2 votes
Accepted

Can I get my home reappraised to eliminate PMI payments earlier?

There are three basic ways to get rid of PMI according to the US government. Under the Homeowners Protection Act, consumers can cancel PMI in a few different ways: Written request. Once the loan ...
mhoran_psprep's user avatar
2 votes

When is a lump sum principal payment to remove PMI worth it?

I would add the 15K if you can afford it. Basically you are now getting 10% on your money, which is a great guaranteed ROI. Also you will never have PMI, which is a lot easier then having it ...
Pete B.'s user avatar
  • 76.7k
1 vote

How much equity do I need for a pledged asset mortgage to prevent PMI?

The basic math in your question regarding how much in stock you would have to pledge is superficially correct. What is missing are the actual rules regarding these types of loans. I went to https://...
mhoran_psprep's user avatar

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