How do I get rid of PMI on my mortgage in Texas?

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I just bought my first home in Frisco, Texas. I have to pay PMI every month. I only have 1 loan with a rate of 7.25% on a 30 year fixed.
How do I get rid of the PMI – it is very expensive and I need to get it off so I just pay the principal and interest. Should I re-finance? I have only had the loan since Jan 2007
I know the norm is 20% must be in equity. I bought it with zero down. The thing is I bought it for #310K and it was listed in the tax records at $ 393K. I got a great deal since they had to leave. Shouldnt I re-finance and get it appraised and show I have more than 20% in the house in equity – that way eliminating the PMI?

  1. Reply
    February 1, 2011 at 11:33 am

    The state of Texas makes you wait a year before you can re fiance. During that time go over your credit and make sure it’s squeaky clean. Then do a re fiance in January 2008. If your home has gone up in value then you maybe able to ditch the PMI. If you still owe 100% of your home’s value then you will have a very hard time finding a lender that won’t ask you to have PMI.

  2. Reply
    February 1, 2011 at 12:08 pm

    Usually you have to have more then 20% equity in the hosue.

    Best bet, contact your lender.

  3. Reply
    Eric T
    February 1, 2011 at 1:06 pm

    Usually most lender/servicers won’t release the PMI until you have paid off 20% of your mortgage. I think that there are some options in Texas but am not sure. Here is a fantastic link which might help you out.

    Hope it helps – oh yeah, if you are a veteran and use the VA benefits for your mortgage, you don’t have to pay PMI.

  4. Reply
    February 1, 2011 at 1:11 pm

    Didn’t you know how much the PMI would cost before you took the loan? You might have taken a piggy back (second mortgage) loan and first, that can avoid PMI. If you can wait a few more months that would be better.
    You have to look at the cost of the re-fi. Also if you can not get a first without PMI and go with a first and piggy back. The second will most likely have a higher rate and require a 15 or 20 year term, which would raise your payment.
    You might also have a prepayment penalty and fee recapture for such an early prepayment. Read your contract and see.

  5. Reply
    February 1, 2011 at 2:00 pm

    PMI is regulated by the Federal Government and every consumers’ requirements are the same from state to state.
    You ask an excellent question. Definitely a re-fi is an option, but it may not save you any money in the long run.
    How you determine if its a cost effective decision is to estimate how long you plan to own your property. If ownership is going to more than 5 years from today it may be a good decision. I would recommend you consult a lender to specific run the #’s for you.
    The last remaining option is to owe 80% of the appraised value or loan amount. If your property has appreciated during your ownership, hire an appraiser to prove to your lender your value has increased and providing the loan to current value is 80% or less loan amount the lender will remove PMI. You’ll want to coordinate all these details with the bank prior to hiring an appraiser, because the bank is very selective which appraiser appraises your property.
    Regardless of how you remove the PMI know it is a time consuming task most often. It is not common to call monthly for several months instructing the bank to remove PMI. It gets done. Note: Some banks customers service is better than others. Hopefully your bank has great customer service.
    I did find a great website…you can play with to calculate option of refinancing (re-fi) or not. I think you’ll enjoy it.
    If you current loan has a pre-payment penalty you’ll need to check with your lender what the pre-payment cost if you re-fi. If you were to re-fi with the same lender would your lender cancel your pre-payment penalty. Make sure to calculate any pre-payment penalties into your re-fi expense to know exactly how much expense it will cost you. Once you know the total expense (regardless penalties and cost for new loan) you or a lender can calculate how many years it would take to break even.
    Example: If it takes seven years to break even, but you only plan on owning the property for two years you definitely do not want to re-fi.
    Maybe the website can help, but definitely call your lender so they can help you determine your best option.
    Good Luck!

  6. Reply
    February 1, 2011 at 2:10 pm

    PMI is a write off per the changed tax rull for 2007. House has to be under 80LTV or you would have to refinace into 2 seperate loans 80/20

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