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Author: SmartConsumer Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 308519  
Subject: Re: Buy a house or pay off cards Date: 4/22/1998 3:10 PM
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<<PMI is really annoying.. this is insurance that is passed to you by the lender which is to insure that
they get their money from an insurance company if you were to default on the mortgage. (A sole protection for the lender only - you as the loanee get no benefit from it).>>

I know this is the credit cards board, but since you brought up PMI I just wanted to make sure everyone knew that once your equity in the house goes above 20% of what the current value of the house is you can get PMI dropped.

I bought a historic house in an up and coming neighborhood 5-1/2 years ago. As a first time homebuyer I was able to buy the house with only 5% down, but was hit with the dreaded PMI. Fortunately the location, location, location maxim was definitely true in my case (house value has doubled since I moved in!). Normally with the majority of my payments going to interest in the first years of the mortgage it would have taken me a while to get to the 20% equity mark, but given the rapid appreciation I reached that point in about 2 years! I immediately called my mortgagor and inquired about dropping my PMI. I had to pay for a reappraisal, but recouped the cost in about 6 months after the PMI was dropped.

I just wanted to bring this up to point out that every new home buyer that starts out with less than 20% down and is forced to take out PMI needs to keep at eye out for when they reach that 20% equity mark and have the PMI removed. If not, the bank will be perfectly happy to keep charging you for PMI for the life of the loan.

Enjoyed your post Bottles! You made a lot of good points.
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