How do I drop PMI?
by 
Real Estate Guy
ANSWERS: 4
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In some states, the loans have to be at least two years old, and the borrower can not have made any late payments in the last year in order to drop private mortgage insurance. In addition, the loan-to-value ratio must be less than 75 to 80 percent. Some state disclosure laws require lenders to notify borrowers after the close of escrow whether the borrower has the right to cancel private mortgage insurance. This eventually may be a federal requirement as well. The PMI percentage is usually dictated by the default rate of the state you are in and the average percent of increase in property value. If you have a question about what the PMI is in your area you should contact a lending professional to see what you qualify for. I used http://www.usfinancing.org to find my last refinancing lender and was very pleased with the rates and service.
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X82dABN is partly correct in that you should not have to pay PMI if you are below 80% not 75%... This depends on the state that you are in and the type of home that you purchase. The PMI percentage is usually dictated by the default rate of the state you are in and the average percent of increase in property value. If you have a question about what the PMI is in your area you should contact a lending professional to see what you qualify for. I used http://www.usfinancing.org to find my last refinancing lender and was very pleased with the rates and service.
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Step 1 - contact your lender Your first step is to contact your lender (the company you send your payments to). Contact information should be on your payment stub or invoice. Lender requirements vary widely on LTV, etc. Step 2 - get an appraisal Your lender will tell you which appraiser you can use. Sometimes you can select your own appraiser. Sometimes the lender chooses the appraiser. Note: you do not need an appraisal if you have paid off at least 20% of your original loan amount.
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You generally cannot eliminate PMI without refinancing. Then, and only then, the new loan must be no more than 80% LTV (loan-to-value). In the case of some mortgages, most notably FHA, the mortgage insurance will be removed after the loan amount falls below 78% LTV. Don't get excited, that generally takes 8 years or more in a flat market. In a declining market, you may find that you are already upside-down and completely ineligible for a refinance, no matter how good your credit may be.
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