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Aug. 11, 2010 - Getting Rid of PMI (MIP) - Mortgage Insurance

Mortgage Insurance is typically required unless you have 20% or more down payment at time of purchase. The "1st mortgage" is for 80% of the value of the home. Any additional amount financed is covered via mortgage insurance. This insurance protects the lender who financed any portion of the amount over the 80% loan to value, in the event the homeowner defaults on the loan and the home is sold at less than the original purchase price. You can get more detail on what mortgage insurance is and why it is required HERE.

There are several ways to get rid of MI. On conventional loans MI (Mortgage Insurance) is commonly referred to as PMI (Private Mortgage Insurance) and on FHA loans it is known as MIP (Mortgage Insurance Premium). On Conventional Loans it is most often a monthly payment and on FHA loans it is a combination of an upfront (most often financed) payment plus a monthly payment. 

The purpose of this post is to point out that at time of purchase, the Mortgage Insurance is determined by the Purchase Price AND NOT THE APPRAISED VALUE of the home. The VALUE for mortgage insurance purposes is either the purchase price OR the appraised value...whichever is LESS.

So if you purchase a home for $300,000 with 5% down and it appraises for $340,000, the mortgage insurance is based on the $300,000 and not the appraised value. BUT after a short time, usually a minimum of six months, IF you refinance the property you can often get the mortgage insurance eliminated.

At the time of the refinance, the Loan to Value is no longer based on the Purchase Price. If the home appraises for an amount that causes the NEW LOAN to be 80% or less of the home's value, mortgage insurance will likely not be required on the new loan and you can save a bundle.

See details on one young man's success story in Truliaboy Refinances His Short Sale Purchase.

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Aug. 16, 2010 - RE: Getting Rid of PMI (MIP) - Mortgage Insurance

Posted by Mike Johnson - Mortgage Broker

Hey Ardell, this post is likely to be very helpful.  PMI can be quite confusing, but you speak very clear about it here.

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Aug. 24, 2010 - RE: Getting Rid of PMI (MIP) - Mortgage Insurance

Posted by Gina Borham - Finance Broker

I'm a freelance finance agent and I'm exploring through the web for articles and hubs concerning the most recent trends and financial rules. I have browsed through your article and I appreciate the time you spent to share this thanks.

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Aug. 31, 2010 - RE: Getting Rid of PMI (MIP) - Mortgage Insurance

Posted by Cheap Car Insurance

Great post, lots of valuable information

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Sep. 1, 2010 - Loan

Posted by Loan Finder Observer

Getting ideas and knowledge on this article. Thankful to shared blogs and post that are informative and of value.

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Nov. 4, 2010 - RE: Getting Rid of PMI (MIP) - Mortgage Insurance

Posted by wyne

 http://automobileinsurancetexas.net/

 
The Savings You Want. Save with our competitive rates and extensive discount options. Compare multiple quotes from independent agents who represent many companies - not just one.
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Nov. 5, 2010 - RE: Getting Rid of PMI (MIP) - Mortgage Insurance

Posted by Kevin the 203k loan guy

With values the way they are today, getting a refi especially in a place like California to get rid of PMI is unlikely in the near future.  I've been doing deals with the PMI built into the rate so at least the borrower can write it off.  You can deduct PMI off your 1040's too but there are many layers to wade thru to qualify for the deduction.  Nice timely post!

<Ahref="http:www.californiarealestateloanshop.com"

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Nov. 30, 2010 - RE: Getting Rid of PMI (MIP) - Mortgage Insurance

Posted by Scoremore

thanks for sharing this,allthe information is very clear,it stated all the information the value for mortgage insurance,the loan to value and the appraised value which is really important toall the lenders and to all who's planning to purchase a new home.

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Feb. 8, 2011 - RE: Getting Rid of PMI (MIP) - Mortgage Insurance

Posted by Kevin the California real estate loan guy

Timely info since many borrowers are now having to pay PMI now that the 80/20 loans have dried up.  When securing a California real estate loan FHA MI isnow more of a factor as well with the increased loan limits.  Educating people on how to get rid of PMI and MI are back and it'll probably be that way for quite some time.

<Ahref="http:www.californiarealestateloanshop.com">california real estate loan</A>

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Feb. 18, 2011 - RE: Getting Rid of PMI (MIP) - Mortgage Insurance

Posted by Paul McHugh

If my home is appraised at  $600,000 and I currently owe $485,000 , is it best for me to take out another loan for the      20-80% ( in this case $5000) or is it best to just continue paying until I reach 80% ( $480,000)?

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Feb. 18, 2011 - RE: Getting Rid of PMI (MIP) - Mortgage Insurance

Posted by ARDELL DellaLoggia

Back several weeks ago when interest rates moved down to just below 4.5%, a few of my clients were able to refinance their entire mortgage from 5.5% to 4.5%. In the process of that overall refinance, the appraisal came in high enough for the new loan to be 80% or less of the appraised value at time of refinance, and the PMI was dropped on the new loan.

Getting a loan for the difference is not the norm, as you need your lender to accept that appraised value. The answer depends on what your current interest rate is on that $485,000 that you owe. If the rate is higher than today's rates by at least .5% or better still closer to 1%, then refinancing the entire loan to a new 80% of value loan with no PMI is often the best strategy as you get a lower rate on the $485,000 AND no PMI as part of one overall process and cost.

To go to your current lender to show value is higher and they should drop the PMI, you need to show that the existing loan is LESS than 80% of value. 80% of value = no PMI ONLY on new loans or refinace loans. Not on "requests to drop PMI" from your current lender. Call your lender and ask exactly how much you would have to pay for them to remove PMI. It is not likely down to only 80% of value.

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Feb. 25, 2011 - payday advance

Posted by payday advance

 I read your blog when I was in Quebec. I bookmarked your site and read your post again when I reached CA after I purchased my new ed online computer. The site is excellent and looks the best in new!

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Mar. 28, 2011 - RE: Getting Rid of PMI (MIP) - Mortgage Insurance

Posted by Seguros de Coche Baratos

Thanks for taking the time to discuss this, I feel strongly about it and love learning more on this topic

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Apr. 4, 2011 - RE: Getting Rid of PMI (MIP) - Mortgage Insurance

Posted by chris the online insurance agent

I seriously doubt after the loan debacle we're now facing that they'll get rid of PMI insurance.  It's likely though that they'll restructure it to insure as it was intended.  At least then you'll be getting something for your money.

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Apr. 12, 2011 - RE: Getting Rid of PMI (MIP) - Mortgage Insurance

Posted by ARDELL DellaLoggia

 Not at all, Chris. One of my clients had it removed based on increased appraisal alone after only 1 year with not extra principal payments. I see no change in the parameters or level of difficulty in removing PMI.

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Jun. 9, 2011 - fast-homeowners-inseurance-quotes.com

Posted by Home Insurance Seattle

Yes I agree with u. I felt great while going through your article. And I will be looking forward to see more of this kind of appealing writings. <a href="http://www.fast-homeowners-insurance-quotes.com/">Home Insurance Seattle</a>

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Jun. 15, 2011 - RE: Getting Rid of PMI (MIP) - Mortgage Insurance

Posted by don

 DOES CALIF CIVIL CODE 1254.12 REQUIRE A LENDER TO REMOVE PMI ONCE THE LOAN REACHES 75% OF THE ORIGINAL PURCHASE PRICE REGARDLES OF THE CURRENT VALUE?

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Jun. 15, 2011 - RE: Getting Rid of PMI (MIP) - Mortgage Insurance

Posted by ARDELL DellaLoggia

 I don't know Don. I'm a real estate agent in Seattle Washington and this is a "Seattle Area Real Estate Blog". Your lender, or any lender in CA may be able to answer that.

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Jul. 25, 2011 - RE: Getting Rid of PMI (MIP) - Mortgage Insurance

Posted by Joe Bellows

Nice well written article. i will look for more of your blogs. i am a mortgage broker located in Oregon but do also have my license in Washington. I am currently looking for a referal source for a realtor in Washington. let me know your thoughts.

Joe Bellows

Security Mortgage Lending

Portland Oregon

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Jul. 25, 2011 - RE: Getting Rid of PMI (MIP) - Mortgage Insurance

Posted by ARDELL DellaLoggia

 Hi Joe,

I don't accept referrals from Lenders, as my role as Agent for the Buyer Client is, in part, to help them select best lender for their immediate needs.

If the Lender refers to the Agent, it obstructs that process given the lender may feel the agent must support the buyer using that lender, regardless of "best for the client", in exchange for the referral. What happens if you find an "agent to work with" and you send them a buyer client and then that agent tells them NOT to use you as the lender? Not a good scenario, I would think, and the agent CAN NOT recommend you as the lender merely because you were "the referral source". Just doesn't work, legally or ethically.

Agents can and do refer to lenders on a "who is best TODAY for this client" basis. But that process does not work in reverse, as the Lender usually wants an agent who will maintain that they, the lender, ARE to be used as a condition of the referral to the agent. And that just doesn't work AT ALL...let alone "well".

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Aug. 28, 2011 - RE: Getting Rid of PMI (MIP) - Mortgage Insurance

Posted by insurancecomparisons.org

The whole financial and tax structure could have been overhauled to the extent that present-day investments don't mean much.

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Oct. 31, 2011 - RE: Getting Rid of PMI (MIP) - Mortgage Insurance

Posted by Seguros baratos

 It is very important to know how you can get cheaper insurance, especially with the crisis we currently

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Feb. 20, 2013 - RE: Getting Rid of PMI (MIP) - Mortgage Insurance

Posted by onesureinsurance

Morgage insurance is probalby one of the highest insurance quotes that you will need to get, not by choice but because very few people actually have enough money to pay for a house so getting a morgage is a must.

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ARDELL DellaLoggia of Sound Realty on Seattle Real Estate process and market including Kirkland, Bellevue, Redmond, Green Lake and most areas around the top of Lake Washington North of Downtown Seattle. Phone: 206-910-1000 - Mailto:ARDELLd@gmail.com

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