I purchased a property in March 2017 and took out a standard 30 year fixed loan. I paid 15% down for the property and took out a loan of 85% of the value. The loan came with a PMI of around $70 a month.
Over the course of this year, I have aggressively paid down the principal of the loan. Today the principal is close to 70% LTV to the purchase price. I've recently contacted my lender regarding removal of the PMI and they have stated the following;
- Within the first 0-2 years of the loan you must show significant improvements have ben made to the property, supported by increased square footage, this is a requirement when the loan is under two years.
- Once the loan reaches 2-5 years, the appraisal needs to come in at 75% LTV but does not need to be supported by increased square footage.
- At five years plus, the appraisal would need to come in at 80% LTV and again wouldn't need to be supported by increased square footage.
is there any course of action available to remove the PMI within the first two years? (without adding square footage)?.
Is the requirement for adding square footage normal for lenders? I was not aware of this at the time of signing. I thought the PMI is there to reduce default risk, I would think the additional principal payment should give them the lenders enough comfort...
Any advice appreciated as I feel like a big sucker paying the extra $70 every month.
Thanks.
