What is the purpose of PMI?

[helpless]

Can someone tell me what the purpose in this is? If you get foreclosed on are you protected because you have PMI? I would love to get rid of my PMI, but am in a 13 and don't really want to refinance because we have a loan at a fixed 5%. According to our newest tax statement (Which I know I can't really go on) the property is worth $200,000 and we owe $159,000. Is there anything we can do?

[Granny]

PMI is for the benefit of the lender. But the good news is you don't have to refi to get rid of it. The lender should drop it once you have sufficient equity, which it sounds like you do. I can't remember the exact percentage, but I'm thinking 20%. Call your lender and see what you need to do, most likely you will need an appraisal to document the increase in equity.

Good luck.

[MTG_BANKER_OH]

Can someone tell me what the purpose in this is? If you get foreclosed on are you protected because you have PMI? I would love to get rid of my PMI, but am in a 13 and don't really want to refinance because we have a loan at a fixed 5%. According to our newest tax statement (Which I know I can't really go on) the property is worth $200,000 and we owe $159,000. Is there anything we can do?

You can brop the PMI once you have reached 20% equity some lenders require you to have it for 12-24 months though, It will automatically drop off oncey our original loan has reached 78% of the original purchase price. On the other hand if there have been any mortgae lates they are not required to drop it off at the 80% figure. The PMI protects the lender against default it does not help you at all. It allows lenders to lend more money at higher LTV's without the risk of default. You will have to contact your lender and discuss the situation with them they will send you a list of conditions that muct be met before they will drop the PMI.

[HHM]

You can actually purchase your own PMI policy to replace the one the lender has you on, and many times, doing so can be cheaper.

[helpless]

Our original loan was for $167,ish or so I think, and that was four years ago. Supposedly our property has increased, I just can't imagine that to be true. not here in downtroddened Ohio. As we still have 13 payments left on our chapter 13, I will probably not mess with it until after. If I get rid of it now, it would just go to the trustee. We have never been late with our mortgage, was never late with anything when we filed, just knew we couldn't hold on anymore.

[MTG_BANKER_OH]

Our original loan was for $167,ish or so I think, and that was four years ago. Supposedly our property has increased, I just can't imagine that to be true. not here in downtroddened Ohio. As we still have 13 payments left on our chapter 13, I will probably not mess with it until after. If I get rid of it now, it would just go to the trustee. We have never been late with our mortgage, was never late with anything when we filed, just knew we couldn't hold on anymore.

I would definitley wait until you are done with the CH 13 unless you are paying the mortgage ourside of the plan. You may still want to contact your lender and have them send you their requirements to drop the PMI. I would think you are safe if your tax value puts you at 20% equity. The tax value is actaully low in many areas, but once most of the counties in Ohio reassessd their values in 2005 the values are closer to market value, but I would not use that a base for what the house is worth. Where in Ohio are you?

[helpless]

Zville and I am paying mortgage outside of plan. My hope would be to get out of here once our 13 is through, but who knows if I will be able to sell this house.

[MTG_BANKER_OH]

Zville and I am paying mortgage outside of plan. My hope would be to get out of here once our 13 is through, but who knows if I will be able to sell this house.

Alot of it comes down to how badly you want to sell, price and home updates, is a large determining factor in this market.

[emoney]

The purpose of PMI is to protect the to make a loan that exceeds 80% of value. Under that level it is not required. Loans above that level have a greated foreclosure rate and loss potiential for the lender so to get them to make a loan over 80% LTV PMI is required.
Once the ratio of loan to value is lower then PMI can be eliminated.
The real lesson is to save up to 20% or more down before you buy and then you own the home and not the other way around.
regards,
emoney

[master01]

Private mortgage insurance can be a benefit for homeowners. The main benefit to homeowners is that private mortgage insurance allows them to buy a house without having to put up a 20% down payment. Also, once the mortgage is paid down to where their home equals less than 80 percent of the original purchase price they can cancel their PMI payments.

[CindyLou]

Do not be fooled that PMI will be automatically cancelled. You will often times have to instist that it be dropped once you get past the 20% equity mark, but do be persistant!