The Real Solution to Mortgage Problems
Question: : I took my mortgage at 10% down because I wanted to hold on to some : cash in case of emergency, etc etc; i had close to 20%, probably coulda : done it at the time had i needed to, but I decided to hold off to : be prudent. [snip]
: My big question is: Assuming they try to enforce the 2 year period : they mention above, what legal rights do i have? Is the mortgage : company required to drop the PMI once i get up to 20% cash equity? : If it matters, i live in michigan.
Answer: I don’t own yet, but have started looking, so I have no first hand experience yet. What follows I hope is correct, but could be in error.
That said, no, your morgage company is not REQUIRED to drop the PMI (although I heard that congress is considering passing a law to make it required somehow), however, you have the right to refinance with any company you want. Many will drop the PMI cause they know you can walk if you want.
If you are pretty close to 20% and want to drop the PMI, you could get the house reassessed and use that as a basis for dropping the PMI. Another option is to take out a Home Equity Loan for the amount and pay up the morgage to 20%. Although the interest/payments on the HEL might end up costing more than you were paying for the PMI, at least now the interest is tax deductable where as I am pretty certain the PMI is not. So you may come out ahead at tax time. Something you might want to look into. This also has the advantage of not having to wipe out your savings account to get rid of the PMI.
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Filed under: Home Equity Loan
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