I just talked to Citimortgage today about why I am still paying PMI.

I have an FHA loan at 5.75% fixed for 30 years.
I live in Texas, if that makes a difference.

I have owned the home for 3 years exactly and have never been late on a payment as it comes directly from my bank account.

Why am I still paying PMI? They say it is because it is an FHA loan. I say I have proven that I am responsible.

I said, OK, let's say I get a windfall tomorrow and pay it down to the $120,000 which is what they quoted as 78% of the loan balance. They said I would still have to pay PMI until 2015! How in the world does this make SENSE??

Should I wander into a bank tomorrow and look into refinancing, perhaps with another type of loan? (Or someone with some knowledge?)

I originally got the loan as an ARM and immediately refinanced; mostly the ARM was because I simply don't make much money ($42,000 year) and it was my first home.
If I refinance again, I do not want to get involved with a bunch of closing costs.

Should I go talk to someone face-to-face, or is this another back door that allows the mortgage companies to screw us?

Apply with a lender and get a GFE(Good Faith Estimate). They are free.
Compare the savings in pmt and consider the costs(not prepaids, costs).
Cost/savings=breakeven.

How long you stay in the property will determine if it is a good investment to refi

__________________
Texas Home Loans

Live Mortgage Loan Chat

Still haven't gotten an answer about PMI....?

you should be good.

First you must realize there are ALWAYS closing costs. You have to pay the title company, the filing fees, the lender, the broker, etc. Everyone gets paid for doing their job. Anytime you have a "no fee loan", they are simply hiding the fees in the higher loan amount or higher interest rate. As far as getting a good faith estimate, that is a good idea if you know what you are looking at, most do not. Also banks do not show fees the same way as brokers because they are not required to, but the fees are still in there.

PMI in most cases must be discontinued when the LTV ratio is 78-80%, depending on the loan. The problem today is that property values are unstable and getting a lender to agree that the property has a certain value may be a challange. Once you can show the value has exceeded the required margin, they are required to eliminate the PMI.

I have worked in the mortgage business for many years so I have some inside knowledge about loans. FHA loans always have PMI no matter how long you have the loan or how well you pay. Your best option is to check into refinancing your loan into a conventional product. You will have to take into consideration all of the costs involved in doing this. It is not beneficial to refinance unless the rate is at least 1.5 to 2% lower than your current rate. The good news is the rates are getting pretty low right now. Go out and shop around for a mortgage with a lower payment that doesn't require PMI.

FHA does not have PMI, it is called MI and it will never fall off........it's a governemtn loan.

I spoke to a MANAGER at Citimortgage and she told me that I was, indeed, misinformed initially.

She said when I pay my loan down to $118,000 the PMI will automatically be discontinued. I told her about the info I got on the finance forum about MI always being a factor in the government loan and she said that it IS an FHA loan but the mortgage insurance will be discontinued after I meet the 80% LTV ratio.

I hope I was not misinformed again...?

The PMI will not automatically be discontinued.

You have to request it be taken off then pay for an appraisal and they choose the appraiser. Once they get a credible valuation then they'll make a decision.

There isn't any motivation on the part of the lender to remove PMI.

One final note for the folks who love to dig themselves deeper in debt with second mortgages and home equity loans.

PMI will never come off if you've taken out a second mortgage or home equity loan.

__________________
Gary Spicuzza, *SAFE
Copyright 1956
No Rights Reserved
*Self Appointed Financial Expert