PMI change

[TyGuy02]

I've seen other mortgage questions in this spot, so I'll ask it here. I heard a rumor that PMI (private mortgage insurance) is changing. The change I heard was that it would stay active for the entire life of the mortgage instead of expiring at the magic 20% equity number. Any truth to this? I heard it would start June 1st. Thanks

[ozzie]

yes this is true...get those loans in or have a case file prior to the June deadline!!

[Tom7227]

I wonder how they can change the terms of a contract like that. A deal was cut that required those payments for X amount of time or until Y level of equity was achieved. Did some government agency change the rules?

[TyGuy02]

I was told that it would only effect new loans starting June 1st. So loans with PMI older than that would not be effected.

[paceman]

I was told that it would only effect new loans starting June 1st. So loans with PMI older than that would not be effected.

That makes more sense.

[311Hemi]

I see a number of things related to PMI changes and FHA loans. Is this change something that is occurring on conventional as well?

I am closing on the new house in 15 days (conventional)...so should not make a difference for me.

[TyGuy02]

From what I heard, conventional and FHA. PMI as a whole would change. Congratulations on closing in 15 days. I guess it just changes my mindset and goals to make sure that I won't need PMI, wait a few years to be able to not have it. But it would probably be a wash or even a loss if interest rates go back up, but I guess that's the risk a person takes.

[Kyhl]

I don't know what the rule changes are but there used to be other ways around PMI.

Prior to the melt down, most people refi'd or moved within 7 years anyway. So by the time you get to 20% equity a refi would get you under the PMI requirements.

Another option was to put 10% down, borrow 10% in a home equity loan (higher interest), and 80% on a mortgage. This would put you under the PMI requirement.

Like I said, I don't know what options changed but there are/were options. Talk to a lender when you are ready. I wouldn't let PMI stand in your way.