Is it normal to have to pay for an inspection to the cancellation of PMI?

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I paid my mortgage off enough where I do not need to carry PMI. I sent Chase said that, and they sent back a letter that I’d pay $ 150 for an inspection, that my “property is not lost value.” I am the PMI was to make sure I was not on my credit default … what does this have to do with my house in the decline in value? I never missed a payment or delay of 5 years. What should I do?

5 Comments
  1. Reply
    Sunshine 0326728
    May 3, 2011 at 9:16 am

    I know its normal to pay for the inspection, but I would call and ask them why it matters if its declined in value or not. Make them explain it to you until you are comfortable with it. You have given them thousands of dollars – they can take a little time on the phone with you and explain things to your satisfaction.

  2. Reply
    jlf
    May 3, 2011 at 9:18 am

    In other words, an abbreviated appraisal.

  3. Reply
    Noneya
    May 3, 2011 at 9:20 am

    You are right, sort of. Yes the PMI is insurance set up for the lender in case of default but thePMI is required based on the loan to value. If you do not have at least 20% equity in your home they will not drop the PMI hence their request for an inspection or appraisal. The appraisal is how the lender will determine whether or not you have the required 20% equity.

    Hope that helps!

  4. Reply
    Terry Socia
    May 3, 2011 at 9:37 am

    Funny
    Noneya just sent me an answer saying the PMI was based on sales price and not the value.

    Read his answer to my question:
    I am buying a home and the appraisal came back at 30% more than agreed price. Do I still have to pay MIP/PMI?.?

    Noneya’s answer:
    Yes you will because the appraised value does not matter. The value is determined by what you actually end up paying for the home per the contracted SALES price. Most lenders will also use the sales price for up to 12 months after the sale when determining the “value” regardless of what an appraisal says

  5. Reply
    Ross
    May 3, 2011 at 9:53 am

    I have had to pay it in the past.

    They are having the home inspected to make sure of its value. If the value has declined you may have to still pay PMI.

    PMI covers the bank. The bank will want your home loan amount probably at no more than 80% of your homes actual value. If your home was valued at 100K and your loan in 80K you would be fine but if the value has dropped lower than a 100K and your balance is 80k you will still need to carry that insurance.

    ADD: Terry, Noneya is right. When you buy the home they use the sale price to determine value BUT when you re fi or try to cancel PMI they will use an appraisal. As far as a time frame the bank will determine that 12 months is a long time in this market for most places, it may be fine with some banks, may not be with others.

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