I have been in a home for 16 months now and a friend of mine told me that I could get the house reappraised and it always shows at least 20% equity in the home. He told me that I could do this so that the PMI is removed. Is this possible and if it is then what steps do I have to take to make it happen? Thanks for your advice!
Yes, you can ask the lender order a new appraisal after your current loan is 24 months old. Just call your lender’s customer service department and tell them what you want to do. If the new appraisal shows that your current loan balance is less than 80% of the appraised value, then you can petition the lender for a waiver of PMI.
If your loan has a 24 month history of on-time payments AND if your property’s appraised value is high enough, the lender will most likely waive the PMI. However, if your loan was a high-risk loan (sub-prime), or if your property is located in an area where property values have seen serious decline, the lender may legally reject your petition to waive PMI.
If the loan is an FHA loan, then its a different matter. FHA requires PMI (or MIP as they call it) to stay on for a minimum of 5 years AND 78% equity in the property.