Posted on: 12th Apr, 2010 08:41 am
Hi,
I bought a foreclosed house last year. I purchased it for 235k. I got the appraisal for the property for over 300k.
I contacted bank to cancel pmi since I have about 30% equity in my house. But bank says that you have to either do improvements that makes the market value go up by 20%. Just that you got the house for low value doesnt count for canceling pmi. They gave me just 2 options.
1. Pay down 20% of 235k.
2. Do the remodeling of the house so that improvements in the house are worth 57k.
I was never late on payment. not a single time. And though I have equity bank is not ready to cancel the PMI.
Am I being cheated by bank here?
I bought a foreclosed house last year. I purchased it for 235k. I got the appraisal for the property for over 300k.
I contacted bank to cancel pmi since I have about 30% equity in my house. But bank says that you have to either do improvements that makes the market value go up by 20%. Just that you got the house for low value doesnt count for canceling pmi. They gave me just 2 options.
1. Pay down 20% of 235k.
2. Do the remodeling of the house so that improvements in the house are worth 57k.
I was never late on payment. not a single time. And though I have equity bank is not ready to cancel the PMI.
Am I being cheated by bank here?
Most banks have a requirement that you must keep the PMI for two years before they permit you to get rid of it because of the appraised value of the property. Most also let you getv rid of the PMI earlier if you do what they say above---pay down to 20% of $235,000 or document improvements made.
After two years you should be able to get rid of the PMI based on the appraised value without having to pay down or document improvements made.
In the meantime, you could try mentioning or threatening (whichever method you desire) the Homeowners Proetction Act of 1998 (HPA) which states a lender can not rquire you to have PMI if the mortgage balance is less than 75% of the appraised value. I do not know a lenders rights as far as requiring you have PMI a minimum of two years before you can get rid of it versus the HPA rules.
You will be required to pay for an appraisal so they can verify the value.
After two years you should be able to get rid of the PMI based on the appraised value without having to pay down or document improvements made.
In the meantime, you could try mentioning or threatening (whichever method you desire) the Homeowners Proetction Act of 1998 (HPA) which states a lender can not rquire you to have PMI if the mortgage balance is less than 75% of the appraised value. I do not know a lenders rights as far as requiring you have PMI a minimum of two years before you can get rid of it versus the HPA rules.
You will be required to pay for an appraisal so they can verify the value.