What to do if PMI is high and keeps going up?

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What to do if PMI is high and keeps going up?

Payment keeps going up after 7 and 1/2 years (I’m also being charged other unspecified amounts). Every time I call them I keep getting different excusses and reasons that they can’t do anything. PMI is $177.76 a month on a $83,000 no money down loan. Just feels like something is not right and about to lose house.

Asked on April 21, 2011 under Real Estate Law, Indiana

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 10 years ago | Contributor

You may not have recourse, unfortunately. PMI is commonly required on loans when less than 20% is put down. You took out a very risky loan, with zero percent down. The amount you have to pay for insurance will be commensurate with the risk profile, and 0 percent is the highest risk profile. You're paying around an extra 2.5% per year equivalent in PMI, which is high but perhaps not unreasonable under the circumstances.

You chose to take out a 0% loan, and the bank agreed to loan it to you, despite the risks. However, since banks don't have to make loans, they have considerable lattitude in the terms. While you can contact the insurance regulators in your state to see what guidelines might exist, it is very likely that the bank may charge you this amount in this situation.


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