Real Estate Home Mortgages/PMI termination


I purchased a 3 family house in 2005 with an FHA loan, and I resided in one of the units for about 2.5 years. After that I relocated out of state.  The original amortization table shows that the PMI should now have automatically terminated due to the loan reaching 78% of the original loan value.  The mortgage company says since the property is now a rental property the Home Owner Protection Act of 1998 no longer applies, and I that I need to get the propery appraised to prove 78% equity to cancel the PMI.  Is this legitimate even though the property was originally purchased as an owner occupied property? Since the property has declined in value, getting an appraisal will not help me cancel the PMI.


The mortgage company is right. The property is no longer an owner-occupied one, and as a rental investment property it presents a higher risk to the lender. For the removal of PMI, investment property owners need to show (through a current appraisal) that they have sufficient equity in the property if they want the insurance to be waived.

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This topic answers questions related to purchasing a home, owning a home, home ownership, mortgage education, mortgage applications, and mortgage needs whether buying a first home or refinancing a current loan. Issues related to home ownership, home equity, mortgage education, refinacing options, home improvment finacing, first time home loans, home equity loans, vactation home loans, and mortgages for investment homes are dealt with here also. Though not the primary focus of this topic, Home Equity Lines of Credits (HELOCS), reverse mortgages, and calculating home equity may also be asked. If you do not see your home mortgae, home finacing, or home equity question answered in this area then please ask a question here

Real Estate Home Mortgages

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Eric Forster


Did your last mortgage broker or lender trick you into a messy situation which could cost you your home? I've been close to 30 years in the mortgage industry, and I've seen it all. Believe me, it is not pretty. As the owner of a mortgage company I am called frequently to testify as an expert witness in mortgage fraud cases and other cases where lenders did not fully disclose the terms of the loans they were offering to the borrowers. I have seen fraud being committed by borrowers - and by lenders. It's a tough world out there. And by the way - you are invited to visit my website,


More than 25 years in loan production and underwriting in Southern California.

Mortgage Bankers of America (Southern California Chapter)

Former columnist for AOL Financial Center and the author of a mortgage primer.

MBA (Finance)

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