PMI Loophole ** Why is an appraisal required 78% of ORIGINAL Loan to Value?
I’ve been prepaying on my mortgage principal, and I will be reaching the 78% LTV in the next couple of months, but as I read the letter from my mortgage company, there seems to be a problem…..the wording in the letter I just received from my mortgage lender seems a bit sneaky…. (my original mortgage was acquired by this company 1 year ago, so this is the 1st time I have received a written explanation from the current lender)
For loans made on or after July 29, 1999, your PMI, if paid by you, will automatically terminate as follows:
If you are current on your loan payments, PMI will terminate automatically on the earlier of:
1) the date the principal balance of your loan is first SCHEDULED to reach 78% of the original value of the
property, which is 1/01/2019; or,
2) the first day of the month immediately following the date that is the midpoint of the amortization period for
your loan (i.e. if you have a 30 year loan, after the 181st payment has been made).
So does this mean that even though I will be at 78% LTV in 2011, I can’t stop paying PMI until 2019?? That seems crazy. Is there anything I can do, or is this law penalizing people who actually pay it more quickly? PMI values are based on the original mortgage amount, so the numbers shouldn’t have to be recalculated.
It seems like a scam to me! Any real estate people out there who can clarify the “scheduled date” for 78%, vs. the actual date I get to the 78% ? I shouldn’t have to pay an extra 9 years when I reached the threshold already!
An appraisal would be a waste of money, because of course, at this point, I don’t think ANY real estate is worth what we paid for it 🙁 Values now have all sunk!