Getting Rid of PMI on Mortgage

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aaronbabu
Posts: 19
Joined: Sun Apr 29, 2018 9:47 pm

Getting Rid of PMI on Mortgage

Post by aaronbabu » Thu Nov 08, 2018 12:04 am

Hello All,

My mortgage is through wells fargo and i bought my home in 2017 for $394k. I only paid 5% upfront and hence there is a PMI on monthly payment. Home values in my neighborhood appreciated quite a bit. So, I was trying to get PMI removed by doing an appraisal. Outstanding loan balance is $345k. I figured if my home value is around $431,250, my LTV ratio will be 80% and hence qualify for PMI removal. However, when I called Wells Fargo, they are saying in addition to having my home value at $431,250 or higher, i also need to have significant home improvement done to my home. That doesn't make any sense. Is this accurate? I don't believe Wells Fargo at all. They don't have a good track record of taking care of customers. I was going to file a complaint with CFPB. But wanted to get your advice before I proceed.

Thanks,
Aaron

ronno2018
Posts: 28
Joined: Sat Apr 14, 2018 9:31 am

Re: Getting Rid of PMI on Mortgage

Post by ronno2018 » Thu Nov 08, 2018 12:16 am

Long ago in 2000 or so we were able to drop our PMI just based on the LTV post appraisal. https://www.wellsfargo.com/mortgage/man ... insurance/ seems to indicate it is more difficult now.

There should be some documentation from when the loan was originated. Good luck!

jminv
Posts: 588
Joined: Tue Jan 02, 2018 10:58 pm

Re: Getting Rid of PMI on Mortgage

Post by jminv » Thu Nov 08, 2018 5:31 am

aaronbabu wrote:
Thu Nov 08, 2018 12:04 am
Hello All,

My mortgage is through wells fargo and i bought my home in 2017 for $394k. I only paid 5% upfront and hence there is a PMI on monthly payment. Home values in my neighborhood appreciated quite a bit. So, I was trying to get PMI removed by doing an appraisal. Outstanding loan balance is $345k. I figured if my home value is around $431,250, my LTV ratio will be 80% and hence qualify for PMI removal. However, when I called Wells Fargo, they are saying in addition to having my home value at $431,250 or higher, i also need to have significant home improvement done to my home. That doesn't make any sense. Is this accurate? I don't believe Wells Fargo at all. They don't have a good track record of taking care of customers. I was going to file a complaint with CFPB. But wanted to get your advice before I proceed.

Thanks,
Aaron
Looking at the CFPB site you only have the right to have PMI ended when the loan balance falls to 80% of the original value of the home, not current valuation. That seems to mean that you don’t have a right to have them end it on a new valuation so contacting the CFPB won’t do anything.

As far as the home improvement bit, that’s probably because they want to see you put more money into the house in a way that actually increases its intrinsic value since you’re asking them to remove something that protects them. It also stops people from having PmI removed easily and due to small fluctuations in home prices that might reverse while showing commitment to keeping the house. I notice that it’s not available in all areas so good that it is in yours. Something to also keep in mind is you have to pay for the appraisal but it is a Wells Fargo appraiser so it might not come back as optimistic as you’d like which is designed to protect them. They may also have the appraisal value your addition so something to ask them about.

If you look at Wells fargo’s site on this they are pretty clear how you can go about having PMI removed. I’d believe that their process falls within what they’re allowed to do here.

Also from their website on what can constitue an improvement:
Something that was not previously on the property. It may add extra living space, or be something that raises the home's value.

Examples may include:

Adding a deck, garage, in-ground pool, fence, or in-ground sprinklers
Finishing a basement
Remodeling living space
Flooring, siding, roof, or upgraded windows

It sounds like you have to run by an addition with them first though to make sure it’s enough to get you what you want. A deck, fence, sprinklers, or remodeling one of your living spaces could be a somewhat inexpensive project that you could do yourself that would get you what you want.

You could also pay down 30k to get the PMI removed. Refinancing would also work but I’d imagine that you have a lower interest rate on your current loan.

Nate79
Posts: 3598
Joined: Thu Aug 11, 2016 6:24 pm
Location: Delaware

Re: Getting Rid of PMI on Mortgage

Post by Nate79 » Thu Nov 08, 2018 8:54 am

Details seem pretty clear on their webpage as was mentioned above:

https://www.wellsfargo.com/mortgage/man ... insurance/

Trism
Posts: 249
Joined: Mon Jul 18, 2016 6:34 pm

Re: Getting Rid of PMI on Mortgage

Post by Trism » Thu Nov 08, 2018 9:21 am

Is this an FHA loan?

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