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Old 10-11-2014, 11:29 AM
 
2 posts, read 2,077 times
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I'm looking for advice from those more experienced on whether or not I should get an appraisal in order to cancel my monthly PMI. I'm clear on most of the mechanics on how this works - so this is a "should I" question not a "how do I" question.

At selling my house was:
"Sales price:" 220k
"Appraised Value:" 222k

I'm currently at 80.8% of the sales price with some prepayments. My "Mortgage Insurance Disclosure" lists a cancellation date in 12 months (80% sales price w/ original payment schedule) and states that I will need an appraisal. It lists a automatic termination date (78% sales price w/ original payment schedule) in about 24 months. I pay about 1k PMI a year.

The current value for my house on zillow puts me at 74% LTV.

I plan on selling the house in 2 to 4 years.

Is it worth getting an appraisal to avoid the 2k in PMI payments before the auto-terminate? I'm assuming that the bank picks the appraiser and that the results will be bias against me. What is the downside if they come up with a low appraisal in terms of reselling the house in a few years? Will it influence subsequent appraisals?

I (& my insurance company) have put on a new roof and we painted the exterior. Other then that the house is in the same state as when we bought it.

Location - near Denver CO

Last edited by slider9375; 10-11-2014 at 11:34 AM.. Reason: Added location to appease the STICKY
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Old 10-11-2014, 12:06 PM
 
Location: Southern California
4,453 posts, read 6,773,425 times
Reputation: 2238
Quote:
Originally Posted by slider9375 View Post
I'm looking for advice from those more experienced on whether or not I should get an appraisal in order to cancel my monthly PMI. I'm clear on most of the mechanics on how this works - so this is a "should I" question not a "how do I" question.

At selling my house was:
"Sales price:" 220k
"Appraised Value:" 222k

I'm currently at 80.8% of the sales price with some prepayments. My "Mortgage Insurance Disclosure" lists a cancellation date in 12 months (80% sales price w/ original payment schedule) and states that I will need an appraisal. It lists a automatic termination date (78% sales price w/ original payment schedule) in about 24 months. I pay about 1k PMI a year.

The current value for my house on zillow puts me at 74% LTV.

I plan on selling the house in 2 to 4 years.

Is it worth getting an appraisal to avoid the 2k in PMI payments before the auto-terminate? I'm assuming that the bank picks the appraiser and that the results will be bias against me. What is the downside if they come up with a low appraisal in terms of reselling the house in a few years? Will it influence subsequent appraisals?

I (& my insurance company) have put on a new roof and we painted the exterior. Other then that the house is in the same state as when we bought it.

Location - near Denver CO
A low appraisal won't hurt your ability to sell in the future. If you are at 80% LTV you might consider a ARM if you can do it at a low or no cost depending on your current rate.

Has it been two years since you purchased your house?
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Old 10-11-2014, 12:13 PM
 
Location: Long Island
9,923 posts, read 23,060,226 times
Reputation: 5897
Quote:
Originally Posted by slider9375 View Post
I'm looking for advice from those more experienced on whether or not I should get an appraisal in order to cancel my monthly PMI. I'm clear on most of the mechanics on how this works - so this is a "should I" question not a "how do I" question.

At selling my house was:
"Sales price:" 220k
"Appraised Value:" 222k

I'm currently at 80.8% of the sales price with some prepayments. My "Mortgage Insurance Disclosure" lists a cancellation date in 12 months (80% sales price w/ original payment schedule) and states that I will need an appraisal. It lists a automatic termination date (78% sales price w/ original payment schedule) in about 24 months. I pay about 1k PMI a year.

The current value for my house on zillow puts me at 74% LTV.
Please don't use Zillow Zestimates for serious calculations!

Ask a friendly Realtor for a Comparative Market Analysis ("CMA") - that'll give you a more realistic idea of what your current market value is.
If it looks like you'll easily pass the 78% requirement now, you could consider paying for an appraisal to save part of the $2,000 (in our area, an appraisal is around $450).
The outcome will have absolutely no impact on your contemplated sale a few years down the road.

Last edited by Elke Mariotti; 10-11-2014 at 12:22 PM..
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Old 10-11-2014, 12:43 PM
 
Location: Just south of Denver since 1989
11,818 posts, read 34,317,414 times
Reputation: 8940
Call your lender and ask what the steps will entail. Get them to send you a letter. Then follow the steps exactly. Sometimes they request money from you to order the the appraisal from their appraisal management company.

I am in Denver, too.
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Old 10-11-2014, 12:46 PM
 
Location: Raleigh NC
25,119 posts, read 16,113,072 times
Reputation: 14408
I would ask the mortgage loan officer who originated the loan for you. And involve your Realtor.

Based on what you typed, it sounds like you may get to drop PMI once 12 more months pass AND you get an appraisal at that time. PMI has changed in the post-banking meltdown so that usually you can't use equity rise to drop the PMI, it has to be 80% of the original loan balance.
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Old 10-11-2014, 04:25 PM
 
Location: South Texas
480 posts, read 1,179,790 times
Reputation: 613
Quote:
Originally Posted by BoBromhal View Post
And involve your Realtor.
Why is this necessary? The business relationship between the OP and the realtor ended at closing.
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Old 10-11-2014, 05:09 PM
 
Location: El Dorado Hills, CA
3,720 posts, read 9,966,416 times
Reputation: 3927
Because the realtor can provide comps to help with the appraisal. Part of ongoing service for lifetime customer.
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Old 10-11-2014, 05:29 PM
 
Location: South Texas
480 posts, read 1,179,790 times
Reputation: 613
Quote:
Originally Posted by NinaN View Post
Because the realtor can provide comps to help with the appraisal.
As written, this comment is correct. A realtor CAN provide comps.
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Old 10-11-2014, 08:17 PM
 
Location: Somewhere in America
15,479 posts, read 15,538,228 times
Reputation: 28462
Don't go by an value assessed by Zillow or Trulla or any of them! They are about as useful as used toilet paper.

I know from experience. I built a house a few years ago. It cost $180K. Zillow NEVER raised the value of the lot plus house to above $135K. It has even sold since I built it for significantly more than the Zillow value. Meanwhile, the houses on both sides of mine and across the street were valued much closer to their build prices. The houses were all in a development and were all very similar including lot size. Zillow makes NO sense whatsoever.
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Old 10-11-2014, 11:08 PM
 
Location: El Dorado Hills, CA
3,720 posts, read 9,966,416 times
Reputation: 3927
Quote:
Originally Posted by TexasDillo View Post
As written, this comment is correct. A realtor CAN provide comps.
I do it all the time for clients and friends trying to refinance. Not sure why you keep questioning this.
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