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Dec
Can Your Mortgage Lender Require Pmi When Your Home Value Decreases?
Author: Rob // Category: Q&ABought my home in 2007 with 20 % down. Never wanted to have to pay PMI. With current home values I may only have 10% equity now. Can the lender require PMI under these circumstances?
Tags: Decreases, Home, lender, Mortgage, Require, Value, When, Your
December 23rd, 2009 at 5:50 pm
Most mortgage contracts do not have a PMI clause for future equity changes. Furthermore, the mortgage holder doesnt have the time nor the money to order appraisals on mortgage inventories, to see if you need PMI.
December 23rd, 2009 at 9:06 pm
Generally they will not go back and modify the terms of the already closed loan, particularly if you are making your full payment on time. However, if you refinance, you may find yourself paying PMI because the loan will go through underwriting again.
So, just stay quiet and pay on time and you should be fine.
December 24th, 2009 at 2:36 am
Yes, but only if the original loan contract specifies that PMI is required when the loan to value ratio goes above 80%.
Remember that equity has nothing to do with how much you put down or how much you’ve paid off of your loan. It only compares current value to loan amount. When values go down, equity goes down.
December 24th, 2009 at 7:07 am
No. THe PMI was never contingent upon a “future” value of your house. It is not a part of your original contract with your lender..
December 24th, 2009 at 10:52 am
I hold mortgages with several banks, none of them have even breached this topic. I do not think they can add it down the road, only at purchase.