croll@oblio.DEC (10/17/85)
>Awhile back on the net someone posted an article that said something >like: If you have an FHA loan and the loan balance or appraised value >is such that you're covered for 20% of the loan, then you can contact >your lender and ask to stop paying the mortgage insurance (PMI). It >was based on a Jan. 1985 article in the Wall Street Journal. I don't >know if different states rule differently but when I contacted my >lender they said that California didn't have such a law. In essence >they said I would always have to pay the PMI. Has anyone else had >experience with this? I've considered waiting a year, getting a >written appraisal and submitting it with a certified letter to the head >office. Is it still worth my trying? I went looking for a first mortgage in March/April of this year, and I investigated the Private Mortgage Insurance issue as part of that search. My available funds (after taking out money for closing, moving, legal fees, and whatnot) came to about 17% of the purchase price. Every lender I talked to (about 15 in the Eastern Massachusetts area) said I would need PMI. The PMI rates were standard, and came to something like $35 - $40 a month. I also asked about when I would have to stop paying PMI, and EVERY LENDER HAD A DIFFERENT POLICY! Some said that as soon as I paid my equity went up to 20% of purchase price, PMI would automatically stop (this was the best news; unfortunately their rates weren't so hot); somebody else said that once my equity was 20% of "appraised value", something they wouldn't define, I could send a letter asking to stop the PMI payments. Others said that I could ask to have PMI stopped once equity was 20% of purchase price, but that it was at the lender's discretion (they would look at payment history, current employment prospects--they made it sound like I would have to apply for the loan again!). Still others simply said, no way! Once I started paying PMI, I would continue to pay it for the life of the loan. (Yet another lender couldn't even answer my question. Makes me wonder how some companies stay in business.....) Yet another question I asked these lenders was if I could go out and get my own PMI. They all said no, and besides the rates were standard and I wouldn't save any money anyway. (Yeah, but at least the kickback would go to an agent of my choice, instead of the bank!) After going through this 10 or 15 times, I went out and managed to scrape together a few thousand dollars to raise my down payment to exactly 20%, and so avoided the whole PMI issue (not to mention the $400-odd dollars per year in premiums). Since closing in May, I have received a letter from what seems like every insurance company on the Eastern Seaboard, all selling PMI. John {...allegra!decwrl!dec-rhea!dec-oblio!croll} Posted: Thu 17-Oct-1985 09:33 EDT To: RHEA::DECWRL::"net.invest"
karl@vrdxhq.UUCP (Karl Nyberg) (10/18/85)
Just recently receiving my escrow account analysis, I decided to check
into the MIP issue. I called the FHA (7 different numbers), and
finally found out that the MIP CAN be cancelled by the lender using
form HUD 2344. However, upon calling my lender (SOVRAN BANK), they
informed me that they had exercised their option (in my purchase money
deed of trust, HUD-92187M) to have the MIP continue to be paid over
the entire life of the mortgage. The TRUTH-IN-LENDING STATEMENT I
received prior to closing listed Mortgage Insurance Renewal Premiums
as part of the cost of the loan I was obtaining.
Maybe I'll order a stack of 2344s and start including them with my
mortgage payments! :-)
--
-- Karl
--
DDN: nyberg@eclb, nyberg@utexas-20, Nyberg@mit-multics
UUCP: ...!{rlgvax, seismo, trwatf, umcp-cs, verdix}!vrdxhq!karl