Getting rid of PMI (part 2): The M stands for “misdirection”

Scribble SquigglePhoto courtesy of Simon Roberts

Part of a series:

To recap: PMI is insurance that you pay when you have a high loan-to-value (LTV) ratio on your home, because you put down a small down payment (usually less than 20%). It protects the lender, not you.

But the idea that I’m paying to protect the lender of my own mortgage is odious to me. So I want to get rid of PMI as soon as possible.

But how to do this? The answer is turning out to be not as easy as advertised.

Questions to ask

I’m no stranger to bureaucratic hoops. After all, I’ve gotten CenturyLink DSL service installed, which ranks somewhere on par with getting a spouse naturalized as a citizen in the U.S. (I’ve seen marriages not even last that long.)

I was prepared for a long battle on this. After all, when you want something more than a company wants it, there is no incentive for a company to make it easy for you. (Think about it: which has shorter hold times, the sales department or the customer service department?)

The first thing I did was to do research on PMI for my mortgage. Questions I wanted to know included:

  • Is there a minimum amount of time I need to hold the loan before I can cancel PMI?
  • Can I actually cancel PMI based on an updated property value?
  • What is the maximum LTV I can have where I am eligible to cancel PMI?
  • When I am eligible, how do I order an updated appraisal?
  • After the appraisal, what else do I have to do to cancel PMI?

It’s a big list to be sure, but fortune favors the diligent, here almost more than anywhere.

My mortgage company is SunTrust. At least it is now. In the slightly over a year that I’ve had my mortgage, it has been sold twice, which is a headache in and of itself.

SunTrust

Actually, I have no choice but to trust you.

So I researched PMI with SunTrust online, and didn’t find much. The best I found was on a previously unknown site called “Lovetoknow”. It’s a helpful page, but it’s a little vague on the details, and it’s the details that matter.

This Reddit thread (yes, I resorted to using Reddit) mentioned that SunTrust required a 75% LTV if an updated property value was used to calculate it.

The difference between 75% and 80% is huge. And no word about how long I had to have the loan for.

And so, reluctantly, I asked SunTrust.

Ask #1

I logged on to my SunTrust account and sent a “Secure Message” (I always wonder what that means) asking for information. After two days I received a “Secure Message” back, saying, that they are reviewing my “request to delete” PMI from my loan, something I did not ask for.

I then received another email saying that they would send me information, by regular mail, in 4-6 weeks.

Certainly glad this wasn’t a matter of life or death.

When I received the packet of information, I was dismayed to learn that it only appeared to mention how to cancel PMI based on the original property value, not an updated value. So I waited almost two months for nothing.

Ask #2

I then tried calling their customer service line to get a more direct response that didn’t involve postage.

The nice gentleman on the phone reviewed my file, and said that the 75% LTV value was indeed correct, but that there was no minimum time before I could request an appraisal and cancellation. Really? I asked. I could apply for cancellation today?

He confirmed, but I don’t believe customer service people any more than the paper their words are printed on, so I asked if they would send me something in writing (or a “Secure Message”) confirming this. No problem, he said. It would arrive in 6-8 business days.

It’s been over a month now, and I’m still waiting.

Ask #3

But I wasn’t going to give up.

So I called again. The woman I talked to this time inspired less than rock-solid confidence. After a long time looking up information, she announced:

SunTrust rep:You have to hold an FHA loan for 5 years before you can request cancellation of PMI.
Me:But I don’t have an FHA loan. It’s a conventional loan.
ST: A pause. “Right, I see that.” Pause. “Um, it’s still 5 years.
Me:Ah. Any chance you could send me confirmation of that in writing?
ST:No.
Me:No?
ST:Unfortunately, we are not authorized to disclose that information from a phone request. You will need to send a letter to us request this information.
Me:Are you sure? Is there any way I can request information without using a stamp and an envelope?
ST:Yes, you can send us a Secure Message.

Ask #4

And so there I was, right back to the “Secure Message” center, trying to rephrase my questions as clearly and as unambiguously as possible, and hoping that I wouldn’t have to wait two months to get an answer.

In the meantime

While this whole process is aggravating, I was prepared for it to be hard. And knowing how much I want to be rid of PMI, and how much I want to learn about the process along the way, it makes all the effort worth it.

And the nice thing is that while this is all going on, I’m still paying extra on my mortgage, decreasing my LTV and increasing my equity with every payment. And let’s be honest, the amount I’m paying in interest each month dwarfs any PMI payment I have by more than an order of magnitude.

But this is not over. I want PMI gone. It will happen. Stay tuned.

But enough about me. Do you have any funny/painful stories about contacting your mortgage servicer? I’d love to hear about them in the comments.

Mike Pumphrey

Mike Pumphrey

I'm the founder and author of Unlikely Radical, a site to help people succeed with money, achieve their goals, and live intentionally.

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Mike Pumphrey
Posted on January 12, 2017
  • Buckshot77

    Any updates to this? I’m just diving into the quest for removing PMI with Suntrust.

    • Yes, I will have updates soon! I’m planning a post about this probably next month.

      In the meantime I can say that I did get the criteria for removing PMI with both an original assessed value and an updated assessed value, and the steps for doing either.

      What’s your situation? Have you reached 80% LTV, or are you trying to get a new appraisal?

      • Buckshot77

        I’d have to go with an updated appraisal value. What I’m unclear on though is how far I am away from 80%. Is the 80% based on the original purchase price or is it based on the appraisal that was required for the loan? In my case, the purchase price was at least a few percent lower than the original appraisal and every bit helps. In any case, with the market uptick in my area, I think I’m right in the area of 78-79% of what an updated appraisal would show.

        • Well, I’ll tell you what I know. Keep in mind that I’m no authority here, just muddling through like everyone else.

          If you want to remove PMI based on your original purchased price, you can do it after you hit 80% LTV. But here’s the rub: If you want to get your property reappraised (say, if it’s gone up in value), then SunTrust dictates that they won’t remove PMI until you’ve hit 75% LTV of the new (“current”) price!

          (Well, it’s 75% if the mortgage is 2-5 years old, otherwise it’s 80%.)

          So if you’re in the 2-5 year range, your home would have to have jumped up really high in value such as to reappraise at under 75% LTV when it’s not now under 80% LTV. It’s your call if it’s worth it to even bother spending the money on an appraisal.

          Here’s a neat trick you might find useful though. Hidden deep in the SunTrust website, there’s an easy way to see what your LTV is. Log in and go to My Loan -> Loan Calculator. Click “Calculate when your loan balance will reach the desired Loan to Value (LTV) ratio” and your LTV will be displayed right there.

          Hope this helps! I’m definitely curious to hear if you decide to go the appraisal route.

          • Buckshot77

            Looks like my best bet is to apply a small amount of extra $ monthly towards the principal and evaluate again in 12-18 months to see where the market has gone. I find it rather disheartening though that the LTV ratio is calculated on the sale price of the house rather than the appraisal at time of purchase. Otherwise it’s pretty much a wash on getting to 75% with a new estimate roughly the same time frame as reaching 80% on the current value which makes the cost of the appraisal not worth it. I’m currently 2 years in on my loan so I’m most likely going to be stuck for another 18-24 months unless I make some large additional principle payments.