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Ryan Baker’s Mortgage Blog

Since I received several similar questions regarding my last blog about Private Mortgage Insurance (PMI), I figured I would share the question with….”What happens if you purchase a house with 20% down and you don’t need PMI, but over time your house drops in value and you’ve lost the 20% equity you had, and no you have zero equity? Does the bank make you get PMI at that point”

To the best of my knowledge, the answer is no. I’ve never heard of a case like that where the bank made someone get PMI after the fact.

The lender takes a chance that 20% is enough at the time of the loan. It is a gamble they have to take. But that is why lenders are going through applications with a fine tooth comb. For the loans that lost their 20%, they don’t just add PMI sporadically after the loan closes. If you were to refinance, however, the new lender would require it. As far as the future goes…I haven’t heard of anything coming that would change this. If anyone knows of anything, let me know.

Feel free to reach me at or 805-540-0866

Written by Keith Byrd - Go to Keith's Website/Profile