I bought my first house in '04 and have PMI on the mortgage. I am close to having paid off 20% of the principle. Does my lender care about the current value of the house when I ask to have the PMI removed? I cant sell it today for what I paid 8years ago. Realistically will the lender remove the PMI removed even if the house has declined in value?

I think you have to wait until you have 20% equity on the present home value, not purchase price.

By law they have to drop it automatically once you hit 22% of your purchase price...even if you're underwater due to falling home values.

Before that, you can request it...but they'll probably want an appraisal.

FWIW I called the my lender and was told they would automatically cancel PMI at 22% of the original amortization schedule. They will usually cancel PMI at 20% Loan to Value with a supporting appraisal, and not 20% of the loan amount.

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I cant sell it today for what I paid 8years ago.

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Do the American thing and walk away.

thanks for the question aw

i have a follow up - what is a typical PMI expense in major metropolitan areas in texas?

Don't know about your lender, but with Chase I had to actively request removal of PMI once I reached 20%+ equity.

And I had to pay fees to do it.

PMI Removal application/processing fee ~$50
Appraisal Fee ~$300

And this was before the market dropped, so the appraiser just did a drive by appraisal. (He did leave his business card in the mailbox.)

They screwed up the processing, so it dragged out for months, but I got them to back date it and give me a refund (w/ interest) on the PMI.

Hopefully you're dealing with a better lender.

@ theo
I believe that PMI rates depend on the amount of the loan, the price of the house, and the size of your down payment. I dont think that the physical location plays into it. I am paying about $85/mo.

@ Chappy
No my lender is Citibank, and I get the distict feeling they are going to be a D bag about this.