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Old 02-17-2009, 10:55 AM
 
3 posts, read 13,166 times
Reputation: 15

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If we were to successfully get our house's property tax reassessed, would it affect our need for PMI, since the home value keeps dropping?

Current zillow stats say home is worth 222,500 (rough figure, of course)
Our property taxes have remained unchanged at $3000/yr (appraised value for this house according to Sacramento is around 300K - ha! There is a similar house around the corner on the market for about that much - on the market for 269 days and counting)
Our current mortgage is roughly 217,000

If the house was successfully re-assessed to match the current market value, my understanding is that we would then not meet the 80% value to not be required to have PMI. I am not all that familiar with this process (first home). I want to know if PMI would be costlier than the property tax in the long term.

...am grateful for your time and knowledge.
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Old 02-17-2009, 11:04 AM
 
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Not sure of the process either. I was talking to a friend a couple of days ago and wanted to refinance his house from 6.75 to 5.5. The figures presented to him will cost him more because they added PMI to his balance. He is not paying PMI now but will if he refinanced and the reason given him was because his new home depreciated in value.
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Old 02-17-2009, 11:24 AM
 
Location: Columbia, SC
1,860 posts, read 4,337,732 times
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Quote:
Originally Posted by mdr23 View Post
If we were to successfully get our house's property tax reassessed, would it affect our need for PMI, since the home value keeps dropping?

Current zillow stats say home is worth 222,500 (rough figure, of course)
Our property taxes have remained unchanged at $3000/yr (appraised value for this house according to Sacramento is around 300K - ha! There is a similar house around the corner on the market for about that much - on the market for 269 days and counting)
Our current mortgage is roughly 217,000

If the house was successfully re-assessed to match the current market value, my understanding is that we would then not meet the 80% value to not be required to have PMI. I am not all that familiar with this process (first home). I want to know if PMI would be costlier than the property tax in the long term.

...am grateful for your time and knowledge.
It's my understanding that no matter what, once you reach 78% LTV on your mortgage, by law on most conventional or VA loans they have to drop PMI. At 79-80% (or higher in a rising real estate market) the lender is able to base it on and/or request a new appraisal. So if your original loan was $300k, once you paid it down to $234k or 78%, I think they have to drop it regardless of what it appraises for if you request it. Someone can correct me if I'm wrong, but that's how I understood it when we got our loan.
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Old 02-17-2009, 11:34 AM
 
Location: Columbia, SC
1,860 posts, read 4,337,732 times
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Quote:
Originally Posted by Buckeye in SC View Post
It's my understanding that no matter what, once you reach 78% LTV on your mortgage, by law on most conventional or VA loans they have to drop PMI. At 79-80% (or higher in a rising real estate market) the lender is able to base it on and/or request a new appraisal. So if your original loan was $300k, once you paid it down to $234k or 78%, I think they have to drop it regardless of what it appraises for if you request it. Someone can correct me if I'm wrong, but that's how I understood it when we got our loan.
It appears I was pretty accurate, except that the rule does not apply to VA loans, only conventional:

How to Eliminate PMI - Private Mortgage Insurance
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Old 02-17-2009, 03:15 PM
 
Location: Sacramento
2,568 posts, read 5,838,497 times
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Once you closed on your home you are set with whatever terms both parties agreed to. Go back and look at you closing docs. I would be shocked if there is any clause regarding loss of value on your home.
As long as you do not refinance you do not have to worry about PMI. You will have to keep your homeowners insurance coverage to be at least the amount of the loan you have.

I was going to go on about the process to re-assessed then I went to the Sac County website and I am sorry to tell you but the dead line to appeal has passed. Here is the link
http://www.assessor.saccounty.net/co...sac_017293.pdf
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Old 02-17-2009, 04:39 PM
 
Location: Escondido, CA
1,504 posts, read 5,330,292 times
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Anything is possible and the only way to know for sure is to look at documents for your mortgage, HOWEVER ...

NORMALLY, once PMI is off, it's off. If you weren't required to pay PMI to begin with (because you had 20% down), or it was dropped because you paid your mortgage down to 78% of purchase price, nobody can force you to start paying that, reassessment or not.

Of course, if you were to refinance today, you'd get a new mortgage and new terms, and your new mortgage would come with PMI because it would be for more than 80% of assessed value. But that is a whole different story.
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Old 02-18-2009, 10:46 AM
 
3 posts, read 13,166 times
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Thanks everyone. This has all been very insightful and useful. I really appreciate it.

We had tried last year to get house reassessed to lower the property tax, and yes unfortunately for Sacramento (maybe this is universal) there is an annual cut-off date for requesting. The Sacramento Bee (local newspaper) even had an article that many houses were being automatically reassessed. It never happened for us -- the process remained unchanged for our situation, even speaking with assessor's office on multiple occasions.

Even better, we are in the last batch of the housing market reset trend, with our current loan resetting in summer 2010. Perhaps there is hope to lower property tax for '09 before refinancing - save a little on property tax, avoid PMI and still keep the house (but worth it??? ...more of a liability than asset for many, many years at this going trend).

Forbes predicted our house value (and ours is something of a Sacramento median for the most part) would drop about 22% (~172K value) in '09 and up about 2.3% (~178K) in '10. At that point, I can only imagine interest rates will have to rise sharply due to the overall health of the economy, thus further declining value, so the dilemma to refinance or cut losses altogether will be even more critical - taking and comparing PMI, interest and property taxes.

Expensive rent! Thanks again. Any additional insight appreciated.
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Old 02-18-2009, 03:03 PM
 
7 posts, read 27,560 times
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Just an addition. PMI is required for at least 5 years, so if you haven't owned the home for at least 5 years, I don't think it would work.
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Old 02-18-2009, 03:41 PM
 
Location: Sacramento
2,568 posts, read 5,838,497 times
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From what I remember there was a form that you can fill out to request a re-assessment. I just checked the link I had but it doesn't work anymore.
In that form there was a space for you to submit information on 2 comparable homes. The thing is that there had to be from home sold before March 31. In my neighborhood prices dropped more after that.

Here is a link to find out how much other houses have sold for
Home Sales Database - sacbee.com

Whatever a house lists for is irrelevant. Until the sale occurs there is no market value.

What do you mean your mortgage resets in 2010? Do you have a 5 yr ARM? Or do you have some type of creative mortgage like interest only, etc...?
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