Hello,
I bought my first home about four years ago in my early twenties. At the time I was even greener than I am now and I’m still pretty darn green.
I didn't put 20% down and was forced to put PMI on my loan. I understood this and was okay with it at the time. I thought that I would be able to refinance once I got to a certain amount of equity and remove the PMI.
Fast forward to the present. Wells Fargo tells me that my PMI is for the entirety of the loan and there is no way to remove it. Which sucks because I'm still making $50/month on the home and without the PMI I'll be making a few hundred.
What are my options to remove this PMI? Can I get a loan through a different bank and pay off my current loan?
Any ideas are welcome and thank you for the advice.
@Lowry Coe, Hey dude, I'm going to start with the meat and save the potatoes for later. You've got to wage war in your mind first and foremost, because everything else gets lighter and easier with the right mindset.
Nobody forced you to buy that house (I assume). You could have rented, you could have owner financed, you could have lived in a van down by the river, but you chose to buy that house and put less than 20% down on it using a FHA loan. So, that's what happened, and in light of the decision you made at the time (when you definitely knew less than you know now), what is the better play?
I start there because if you don't exert ownership on this decision, every subsequent move you make is going to built on a foundation of "a problem someone else created for you." Don't do it man. Own it and learn from it.
Your best play after this is to look at a refinance onto a conventional loan (which would be ideal if you have 25% equity now) or keep it up and know that if you DON'T refinance you still earn $50/month and you have $0 in refinance costs.
Wage war brother,
@Lowry Coe, Hey dude, I'm going to start with the meat and save the potatoes for later. You've got to wage war in your mind first and foremost, because everything else gets lighter and easier with the right mindset.
Nobody forced you to buy that house (I assume). You could have rented, you could have owner financed, you could have lived in a van down by the river, but you chose to buy that house and put less than 20% down on it using a FHA loan. So, that's what happened, and in light of the decision you made at the time (when you definitely knew less than you know now), what is the better play?
I start there because if you don't exert ownership on this decision, every subsequent move you make is going to built on a foundation of "a problem someone else created for you." Don't do it man. Own it and learn from it.
Your best play after this is to look at a refinance onto a conventional loan (which would be ideal if you have 25% equity now) or keep it up and know that if you DON'T refinance you still earn $50/month and you have $0 in refinance costs.
Wage war brother,
Hello,
I bought my first home about four years ago in my early twenties. At the time I was even greener than I am now and I’m still pretty darn green.
I didn't put 20% down and was forced to put PMI on my loan. I understood this and was okay with it at the time. I thought that I would be able to refinance once I got to a certain amount of equity and remove the PMI.
Fast forward to the present. Wells Fargo tells me that my PMI is for the entirety of the loan and there is no way to remove it. Which sucks because I'm still making $50/month on the home and without the PMI I'll be making a few hundred.
What are my options to remove this PMI? Can I get a loan through a different bank and pay off my current loan?
Any ideas are welcome and thank you for the advice.
I don't believe that PMI should be for the entirety. Usually there is a way with appraisal to get it removed, but you have to pay for the appraisal and sometimes it requires more than 20% equity to remove. If you refinanced the loan, that would remove PMI. What is your interest rate right now? There is some pretty amazing rates for owner occupied right now, so refinancing may save you even more than the $50 per month.
It sounds like this is a rental property? Did you buy it as a rental? Or was it your primary home at purchase? If you initially bought as a rental, then you probably do not have an FHA loan. If you have a conventional loan, where you put less than 20% down, then you may not have to refi if you are good with your current rate. You will have to pay for an appraisal, but as long as it appraises for what you need to be under 80%, you can have PMI removed. I did this on my current home several years ago, but was already in a conventional loan. You would need to go through WF though, as they will want to use their own appraisal company. If you have an FHA loan, you should refinance into a conventional loan, and possibly lower your rate AND drop PMI. Rates are actually pretty good right now, depending on the rate you currently have. That would be a win/win.
@Daniel Luedtke I purchased it as my primary residence and lived there for two years before moving out and renting it. I have an FHA loan. I put less than 20% down. Regarding rates, I actually bought around at what rates are at right now so I'm not too concerned there. I just want to figure out how the hell to lose this damn PMI.
@Joe Splitrock every time I ask WF about what steps I need to take to remove the PMI they tell me there is nothing that I can do and that it is for the entirety of the loan. Totally blindsided me and was not something I was experienced enough to look for when I bought.
Lowry, you will need to refi out of your FHA loan then. If done right, you shouldn't really have many closing costs. I would NOT go back to WF if they are not giving you options to refinance into a conventional loan. Find a mortgage broker, they will have the best rates and loan programs to offer you. Since this will now be a rental property, rates may not be as low as primary residence loans, but you will have to see which makes more sense, to keep the PMI and current loan, or refi out (maybe a bit higher rate), and get out of the PMI payments. Even if a bit higher interest rate, it may make sense to drop PMI. Good luck!
@Daniel Luedtke I purchased it as my primary residence and lived there for two years before moving out and renting it. I have an FHA loan. I put less than 20% down. Regarding rates, I actually bought around at what rates are at right now so I'm not too concerned there. I just want to figure out how the hell to lose this damn PMI.
@Joe Splitrock every time I ask WF about what steps I need to take to remove the PMI they tell me there is nothing that I can do and that it is for the entirety of the loan. Totally blindsided me and was not something I was experienced enough to look for when I bought.
Call someone other than Wells Fargo to refinance it.
@Daniel Luedtke I purchased it as my primary residence and lived there for two years before moving out and renting it. I have an FHA loan. I put less than 20% down. Regarding rates, I actually bought around at what rates are at right now so I'm not too concerned there. I just want to figure out how the hell to lose this damn PMI.
@Joe Splitrock every time I ask WF about what steps I need to take to remove the PMI they tell me there is nothing that I can do and that it is for the entirety of the loan. Totally blindsided me and was not something I was experienced enough to look for when I bought.
I didn't know it was an FHA loan. In that case then no there is no way to remove PMI. FHA is a great program and you pay into a risk pool for those who default. That would have been clearly communicated through disclosures in your loan documents that you signed. If it was a conventional mortgage with PMI, then federal law gives options for removal once equity requirement is met. FHA is a great program and you received massive benefit from it, so I wouldn't be mad about this. Just refinance into a conventional. Provided you have enough equity, they can roll in closing costs so it is nothing out of pocket.
Lots of good advice on the thread; your specific circumstance will dictate the best option. Most likely you'll want to look at doing a rate/term refi into a conventional mortgage. This will likely lower your payment, get rid of PMI (it's called MIP under FHA, but essentially the same thing), and free you up to do another FHA loan (you can only have one active FHA loan to your name at a time). FHA rules were changed regarding MIP, so anything with <10% down now has permanent MIP, regardless of term.
https://www.fha.com/fha_requirements_mortgage_insurance
@Lowry Coe you're 'talking past' WF here, and they aren't helping you understand (not their job, but it's nice to think people in customer service would explain better).
You purchased w/ FHA and now have a loan w/ PMI. You call asking to remove PMI and they say that you can't remove it, which is true of FHA loans after 2016ish. So to eliminate the PMI you need to refinance out of the FHA loan into a conventional loan. The problem is that may be what you think you're asking to do, but it's not.
What I hear in your posts above is you are presenting that you want to get rid the PMI by refinancing. So when you talk to WF you say you want to refinance to drop the PMI...which confuses them because they are used to getting requests for conventional loans to drop the PMI based on equity, which you can do without a refinance. Just tell them you want to refi your loan and don't say anything about the PMI, that is irrelevant to them. But by refi'ing that is exactly what you will do.