Can you use a 2nd mortgage to remove PMI on a pre-existing first mortgage?
I have read that a lender must automatically remove PMI once your LTV is 78% of the original amount financed. I have a single loan, and I bought the property well below market value. Since my loan is not 2 years ancient the lender will not remove PMI with a simple apprasial. Is the lender required to remove PMI if I use a 2nd on the property to pay down on the first to get below the 78%.
To add a small more detail. I bought this house prior to selling my ancient one. Now that my ancient one is sold I find I am a few percentage points away from achieving the 78%
I’m not so sure the bank has a real say once I get to 78% from the original finance amount. The Homeowners protection act(1998) seems to indicate that they have to remove it by law.
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Tags: apprasial, finance, homeowners protection act, ltv, percentage points
THEY HAVE TO REMOVE IT.
I would speak to a supervisor concerning this, and work up the ladder to a manager. You wont need to do an appraisal if you can prove it’s 78% of the original amount financed. THIS INFO IS ON YOUR CLOSING DOCUMENTS!
I would call them EVERYDAY to get it off.
SEND THEM A CERTIFIED LETTER DEMANDING TO TAKE IT OFF OR YOU WILL TAKE THEM TO COURT.
By the way….piggybacks are when you take out a 2nd loan simultaneously with the 1st mortgage.
Stand alone seconds or 2nd mortgages are when you take it out AFTERWARDS.
BEWARE that if you take out this 2nd mortgage…and you plot to refi later on…this will be called a CASH OUT refinance because you didnt take it out the day of your 1st closing.
i am not sure check wit a loan officer first
YES, But………
Compare the interest rate on the NEW loan plus costs of doing the second loan. Chances are, the amount you are paying in PMI is lower (and TAX DEDUCTIBLE) than what the 2nd loan would be.
The 78% will be based on what the ORIGINAL LOAN balance was NOT the value of the property TODAY.
Hope this helps and Excellent Luck
yes its called a piggy back loan and a lot of people are now doing this because of the sub prime market fallout. But the catch is you must of agreeded to it at initial offering. Though a second mortgage or home equity loan may help. But if the property is well below market value (sounds like costal property) then i doubt you could get the home equity loan. And its 75% not 78%.
The PMI is a scam anyway and I’ll bet you have an escrow account too right???? Another scam that you are forced to be in. You siad two years and that makes me curious as to wether or not this is an ARM if so get out NOW try lennox financial (just a name I heard on XM radio I don’t use them) but if you have an ARM start shopping.
Yes, but chances are, the rate on your 2nd mortgage will be higher than what it would cost to just pay the PMI. THEN you’re stuck with a second payment for 30 years instead of just being stuck with PMI until the loan balance has gone down.
You might want to consider paying more than your monthly payment instead – it’ll drop your loan balance quicker, and you’ll have less time when you’re paying PMI
It is up to the bank. Most of them required that you pay it for at least 2 years, regardless of what your LTV is. You can certainly refinance your first mortgage without PMI.
Call your lender and tell them your house has increased in value at least 20% and they will tell you to get an appraisal and send it to them. They will not automatically remove the PMI its up to you because they don’t when your value goes up. I do PMI appraisals all the time for homeowners and it will run you between $300-500 for the appraisal.