This regularly-scheduled sponsored Q&A column is written by Eli Tucker, Arlington-based Realtor and Rosslyn resident. Please submit your questions to him via email for response in future columns. Enjoy!
Question: I believe the value of my home has increased substantially. Can I leverage this to remove the (Private) Mortgage Insurance from my mortgage?
Before responding, let me catch everybody up on some basics:
- Jake Ryon of First Home Mortgage explains (P)MI simply as “an additional payment a borrower has to pay to offset risk to the lender when the down payment doesn’t equal 20% or more of the sales price or appraisal value, whichever is lower”
- It’s included when the Loan-to-Value (LTV) is above 80%. LTV is the amount of your loan divided by its value. In other words, the value minus your down payment (80% LTV = 20% down payment). This is the basis for today’s question – if the value of a home increase, the LTV decreases (more owner equity), and may allow a borrower to remove (P)MI.
- The monthly cost is based on factors that include LTV, credit score, and loan size. Generally monthly payments range from about .25%-2% of your loan balance, divided by twelve
- Conventional loans = Private Mortgage Insurance (PMI); FHA loans = Mortgage Insurance (MI)
If you have PMI on a conventional loan…
Per Jake Ryon of First Home Mortgage, you can request that it be removed when the LTV hits 80% based on payments against the original value or the value of the home has increased enough to bring the LTV to 80% or less. For example, if the original value of your home was $500,000 and you currently have $450,000 left on the loan, a new appraised value of $562,500 would result in a new LTV of 80% and your loan servicer may agree to remove PMI. Some key points:
- You cannot have a late payment within the last two years
- The request must be made in writing to your servicer (who you make payments to)
- If you’re making the case based on increased value, you’ll need the loan servicer to order a new appraisal, at your expense
- It’s ultimately the loan servicer’s choice whether or not to remove the PMI
It will be automatically removed when:
- You reach 78% LTV on the original value of your home
- You reach the midway point of your loan and have not reached 78% LTV (e.g. 15 year mark on a 30 year loan)
If you have MI on an FHA loan…
If your FHA loan was created after June 3, 2013 and your original LTV was 90% or higher, your mortgage insurance cannot be removed at any point during the life of the loan and the only way to remove these payments is to refinance into a new loan once you can attain an LTV of 80% or less. If your mortgage was created before this date, your MI will be automatically removed at 78% LTV.
Eli Tucker is a licensed Realtor in Virginia, Washington DC, and Maryland with Real Living At Home, 2420 Wilson Blvd #101 Arlington, VA 22201, (202) 518-8781.
The views and opinions expressed in the column are those of the author and do not necessarily reflect the views of ARLnow.com.
An alleged shooting threat briefly sent students practicing on a school field indoors tonight.
Good Wednesday evening, Arlington. Let’s take a look back at today’s stories and a look forward to tomorrow’s event calendar. 🕗 News recap The following articles were published earlier today…
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At Generation Hope, we’re dedicated to supporting teen parents in college as they work toward earning their degrees. We are in need of caring child care volunteers for upcoming events on Saturday, October 21st (in Washington, DC), and Saturday, November 4th (in Arlington, VA). Join our growing volunteer community and support us at an event this fall!
At all of our events, we provide free onsite child care for the children of the teen parents we serve, creating a nurturing environment for the kiddos while their parents learn valuable life skills and build community.
If you enjoy working with children and are looking to make an immediate impact in your community, please visit https://www.generationhope.org/volunteer to learn more.
Join us for Arlington’s biggest civil rights & social justice event of the year. The banquet is back in person at the Arlington Campus of George Mason University.
Our keynote speaker this year is Symone Sanders from MSNBC and former Chief of Staff for Vice-President Kamala Harris.
The Master of Ceremonies is Joshua Cole, former state delegate, NAACP President, and local pastor.
Tickets/seating are limited. Purchase your ticket today! Sponsorship opportunities available.
Live standup comedy starring John F. O’Donnell (Comedy Central)
Friday, October 20
Headliner: John F. O’Donnell
John was a correspondent on the radical comedy news TV show, “Redacted Tonight,” for 5 years. Recently, he released his debut one-hour standup special,