Monday, March 6, 2006
Help Me Howard: PMI
If you have bought a home and put less than 20 percent down odds are you might have been forced to pay mortgage insurance. But guess what...the odds are just as great that you dont have to pay it. How? Thats why one man called Help Me Howard with Patrick Fraser.
WSVN--In case you haven't heard, real estate has been on a hot streak in South Florida the last few years.
Raymond Murga: "I bought this house in January 2004 I paid 225,000 dollars for this house."
When Raymond bought his home he only put down 5%, so the bank required him to have whats called Private Mortgage Insurance...or PMI. It cost Raymond another 120 dollars a month...
Raymond Murga: "According to the information that I have read its an insurance that protects only the bank and not the consumers."
Pretty accurate, says Howard.
Howard Finkelstein: "Yes...lenders require the mortgage insurance if you put down less than 20 percent to protect them in case you default on the loan."
But as real estate prices soared, a year after Raymond bought his home he realized he had over 20 percent equity in his home. So he called the mortgage company.
Raymond Murga: "And they told me based on the information that I told them that I would qualify for it to be removed..."
They told Raymond all he needed to do was get an appraisal. He paid $350 for it and it did show he had over 20 per cent equity in his home. But the bank then denied his request to drop his PMI.
Raymond Murga: "They werent sticking to one set of rules, the rules were changing as time passed..."
Now they wanted him to get the loan amount below 210,000 dollars -- he did..
And got a letter saying his mortgage insurance was 'no longer required' and was dropped.
Then he got another letter saying they made a mistake and he had to keep paying it unless he made improvements to his property.
Raymond Murga: "As they send me these documents, the information changes from document to document..."
But one thing has remained constant with Raymond, his desire to quit paying 120 dollars a month for that mortgage insurance.
Raymond Murga: "I would like to see it removed."
To find exactly what he needed to do to drop his mortgage insurance Raymond asked Help Me Howard to review all his documents.
Howard Finkelstein: "Raymond didn't know it -- and apparently for awhile, neither did the lender -- but he had to own the home for two years before he could remove the PMI. The bank made a mistake in telling him he could possibly drop it and they made a mistake when they dropped it. But they do have a right to correct their mistake."
Fortunately, Raymond has now owned the home for over two years.
But the appraisal he got expired after 6 months.
To get a new appraisal would cost him another 350 dollars.
When I spoke to his lender they thanked us for bringing this to their attention and they put their money where their mouth was.
Agreeing to pay for the new appraisal and work to help raymond quickly drop his PMI. Good for Raymond and something every homeowner should check into.
Howard Finkelstein: "If you have mortgage insurance each lender has different rules for dropping it. Find out in writing what they are and if you qualify get rid of it..its money that you are just throwing away."
The PMI cost Raymond $1,360 a year... Money he saved by calling Help Me Howard.
Patrick Fraser: "Glad we could help... And by the way experts say because of the increase in real estate values, alot of people who don't need it are paying for mortgage insurance. To get rid of it you need to take the initiative. So contact your lender and find out what you need to do in writing before you spend a dime to drop it."
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