Author Topic: How to battle PMI?  (Read 3087 times)

Boze Bananas

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How to battle PMI?
« on: December 30, 2014, 11:56:02 AM »
Hi, I've done a bit of reading through these forums but would like personalized help on my mortgage.
My household take home pay is approx $36K.  We bought our house in '07 right before the crash for $182,500. Putting 10K down.  We refi'd in '11 for $155K at 4.125%.  The thing is that we pay $71 a month for PMI but our house value went down to 155K.  In order to get 80% we'll have to get down around 120K and we still have 145K left to pay with our montly payment being $1,150 including escrow.  Should we refi again? Just keep paying additional on the Principal?  I think it will still take 3+ years to pay off that much and its frustrating throwing our money away like that.  Should we just invest any extra money and not worry about the PMI??  Help!!      Thanks,  Matt
« Last Edit: December 30, 2014, 11:59:20 AM by Boze Bananas »

Future Lazy

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Re: How to battle PMI?
« Reply #1 on: December 30, 2014, 12:00:43 PM »
Keep throwing additional money the principal. Since PMI is pissing money away, more or less, paying the mortgage down to a point where it can be eliminated (either by your current lender, or by refinance, depending on the rules surrounding your mortgage,) is the fastest course of action.

I say this thinking that chances are another refinance would still come with PMI. Talk to a lender.

Jesus Christ

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Re: How to battle PMI?
« Reply #2 on: December 30, 2014, 02:00:14 PM »
The PMI is still tax deductible like mortgage interest so that is a plus. I am not a finance major however if it was me, I would invest the money instead of paying extra principle until you have enough cash to get to that 80% point if you don't already. Then if it makes sense, pay a large part to the principle at once in order to have PMI removed for good for being 80% LTV or less.

If you have an FHA loan, they require you to pay 5 years of PMI before you can even think about getting it removed. If you streamline refi, the 5 year clock resets.
« Last Edit: December 30, 2014, 02:02:37 PM by Jesus Christ »

Gone Fishing

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Re: How to battle PMI?
« Reply #3 on: December 30, 2014, 03:27:27 PM »
Right now you are paying an effective 7.5% on the $25k portion of your loan and it only gets worse as you pay down your loan until you get it removed.  Your best bet is to find a second loan at a lower rate that will allow you to get rid of the PMI (as others have mentioned, check with the lender about specific rules).

Boze Bananas

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Re: How to battle PMI?
« Reply #4 on: December 30, 2014, 03:57:41 PM »
Thank you Jesus!  And thanks to everyone else for their advice.  I forgot to mention that this is a conventional loan, so I guess I will look into taking a second mortgage to try to get rid of the PMI then?

Gone Fishing

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Re: How to battle PMI?
« Reply #5 on: December 30, 2014, 05:41:49 PM »
Might work, but don't be surprised if you get turned away a few times.  Keep pounding away until you get a yes.  Post any offers before committing. 

Future Lazy

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Re: How to battle PMI?
« Reply #6 on: December 30, 2014, 06:38:12 PM »
Thank you Jesus!  And thanks to everyone else for their advice.  I forgot to mention that this is a conventional loan, so I guess I will look into taking a second mortgage to try to get rid of the PMI then?

Taking a second mortgage could STILL have PMI, so read the fine print! I do know that new loans with low down payments that have PMI now have PMI forever, unless refinanced later without it, which requires having paid down the mortgage by 20%+.

Good luck, do let us know how it turns out though!