PMI cancelation question

[Brian Scott]

Hello everyone,

My wife and I own a mutli-family home and purchased it in February 2022 for 495,000. We put 5% down using an FHA loan and currently have an outstanding balance of 450,063.

We have a PMI payment of about 300.00 per month.

We have put a considerable amount of money into the home to include a completely renovated 2nd floor 2 bedroom unit. Updated bathrooms on the first and second floor. A new kitchen on the first floor. New roof. New paver patio. New Driveway. New Garage door on detached 2 car garage.

My mortgage company is Citizens Bank and from looking at their rules for PMI cancelation(per google AI) they are:

"Citizens Bank will automatically cancel private mortgage insurance (PMI) when your loan-to-value (LTV) ratio reaches 78%. This means that the principal balance of your loan is 78% of the original value of your home. You must be current on your mortgage payments to receive this automatic cancellation. You can also request to have PMI canceled earlier if you meet certain requirements:

• You reach 80% LTV in your home
• You have 20% equity in your home
• You have a good payment history
• You have no other liens on the home

You can request a PMI cancellation in writing to your lender or servicer. You may need to get a home appraisal, and you'll be responsible for the cost"

My question is : Should I have my own appraisal done by a reputable company that would be accepted by banks for appraisal estimates and then request Citizens to do their own appraisal for a request of PMI cancelation. This way when they try to low ball me I have my own appraisal ready to go.

Or - should I just request a PMI cancelation from Citizens bank and wait to see what their appraisal comes back at.

Or - am I going about this all completely wrong?

Please advise - thank you!

[Jay Hurst]

Quote from @Brian Scott:

Hello everyone,

My wife and I own a mutli-family home and purchased it in February 2022 for 495,000. We put 5% down using an FHA loan and currently have an outstanding balance of 450,063.

We have a PMI payment of about 300.00 per month.

We have put a considerable amount of money into the home to include a completely renovated 2nd floor 2 bedroom unit. Updated bathrooms on the first and second floor. A new kitchen on the first floor. New roof. New paver patio. New Driveway. New Garage door on detached 2 car garage.

My mortgage company is Citizens Bank and from looking at their rules for PMI cancelation(per google AI) they are:

"Citizens Bank will automatically cancel private mortgage insurance (PMI) when your loan-to-value (LTV) ratio reaches 78%. This means that the principal balance of your loan is 78% of the original value of your home. You must be current on your mortgage payments to receive this automatic cancellation. You can also request to have PMI canceled earlier if you meet certain requirements:

• You reach 80% LTV in your home
• You have 20% equity in your home
• You have a good payment history
• You have no other liens on the home

You can request a PMI cancellation in writing to your lender or servicer. You may need to get a home appraisal, and you'll be responsible for the cost"

My question is : Should I have my own appraisal done by a reputable company that would be accepted by banks for appraisal estimates and then request Citizens to do their own appraisal for a request of PMI cancelation. This way when they try to low ball me I have my own appraisal ready to go.

Or - should I just request a PMI cancelation from Citizens bank and wait to see what their appraisal comes back at.

Or - am I going about this all completely wrong?

Please advise - thank you!

@Brian Scott You say in your post that you have a FHA loan taken out in 2022 with 5% down. Unfortunately, you are stuck with the monthly mortgage insurance. FHA loans taken out after 2013 with only 5% down cannot drop MIP for the life of the loan. The chart you are referencing above is for a conventional loan, not FHA.

Your only option would be to refi into a conventional loan to not have MIP on the new loan. Hindsight is 20/20 of course but this is advise borrowers to go the conventional route (assuming they can qualify of course) because it is a cheaper loan then FHA with the MIP for life.

https://www.bankrate.com/mortgages/remove-fha-mortgage-insur...