Posted on: 24th May, 2010 09:07 pm
I have been paying extra on my mortgage every month so I could cancel PMI sooner. I have now paid off more than 22 percent of the original purchase price of the home. I have read numerous articles that say the mortgage company is legally required to cancel my mortgage once I have paid off 22 percent of the original purchase price. However, when I contacted my lender, Bank of America, they sent me a letter insisting that they will only cancel the PMI if the value of my home has not declined from the purchase price. They also say I have to get it appraised and of course I have to pay for that. Now, everything I have read says it is the original purchase price that counts, not the current value. I know that with the housing market the way it is, my home has probably lost some of its value, so if I get it appraised they will just tell me it dropped and I'll be out $120 dollars. But I don't think I should have to pay this fee or get it appraised. My understanding of the law is that they should just cancel it, no questions asked. Am I wrong?
Hi hiddendragon!
Welcome to forums!
The lender will want to check out the property value and then he will take steps to cancel the PMI. In my opinion, it will be better if you could appraise the property. If your property value remains the same, then you would be able to get the PMI canceled.
Feel free to ask if you've further queries.
Sussane
Welcome to forums!
The lender will want to check out the property value and then he will take steps to cancel the PMI. In my opinion, it will be better if you could appraise the property. If your property value remains the same, then you would be able to get the PMI canceled.
Feel free to ask if you've further queries.
Sussane
Hi Sussane,
Thanks for the response. The problem is, I don't think the property value will be the same. There are other units in the same complex for sale for $30,000 less than what I paid two years ago (they are foreclosures). So I'm sure the value has dropped somewhat, even if only a few thousand. So if that's the case, according to the letter I received, they won't cancel the PMI and I will have wasted that fee I have to pay. It is frustrating because I've read in numerous places that the present value should have no bearing on this process and I feel like legally I'm due for my request to be granted with no exceptions.
Thanks for the response. The problem is, I don't think the property value will be the same. There are other units in the same complex for sale for $30,000 less than what I paid two years ago (they are foreclosures). So I'm sure the value has dropped somewhat, even if only a few thousand. So if that's the case, according to the letter I received, they won't cancel the PMI and I will have wasted that fee I have to pay. It is frustrating because I've read in numerous places that the present value should have no bearing on this process and I feel like legally I'm due for my request to be granted with no exceptions.
As per the Homeowner's Protection Act (HPA), you can request cancellation of PMI when you pay down 20% of your mortgage. The original purchase price or appraised value of your home at the time the loan was obtained, whichever is less will be considered by the lender while canceling the PMI.
I understand that, but I have read that when you reach 22 percent paid off, the lender legally has to cancel the insurance. This is the problem - I don't think I should have to jump through hoops and spend money if the law says they should have already cancelled it.
It's 78% based on SCHEDULED balance for conventionals. Curtailments don't do any good for this test -- you must get an appraisal which you admit won't work. FHA uses actual versus scheduled balance.