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Old 01-22-2009, 04:46 PM
 
24 posts, read 58,322 times
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Hello - I'm calling on all real estate/mortgage professionals here. Several years ago I had an appraisal done on a home I'd owned for a few years that had appreciated and was able to eliminate the pmi I was paying with the increased appraised value putting me at the magic 80/20 ltv ratio.

So..I am closing on an incredible deal I got from a builder on an already built home who is closing out this phase in a fabulous new development. Looking at sales prices from zillow (which of course I know is not exactly scientific) I've found six sales in my neghborhood in the last six months, ranging in price from 375k-450k. My sales price is 293k and I'm putting 5% down.

So, Please give me opinions on whether it would be worth it for me to pay for an appraisal sometime after closing and see if it would appraise high enough to get rid of PMI. If not soon after closing, do you recommend a period of time for "seasoning" the mortgage before getting an appraisal? Months? Years? Of course I'll keep an eye on sales prices in my neighborhood as well!

Thanks for any opinions!

colleen
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Old 01-22-2009, 04:50 PM
 
3,774 posts, read 7,526,111 times
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had the same deal on my first house... had to refinance to get rid of PMI since I didn't have 20% equity in terms of loan value. My situation may have been tied to the loan type I had at the time (Fannie Mae).

Good luck, I'd recommend checking with your note holder to see if they'd be game. Hopefully you have better luck than I... vowed to never again put myself in a situation where I'd have to pay PMI!
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Old 01-22-2009, 05:34 PM
 
Location: "The Gorge"
905 posts, read 3,242,886 times
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Funny, I just posted a similar question in the Personal Finance thread, here is the link. How to get rid of PMI?
Perhaps some of those responses might answer your question. But it sounds like you might be stuck with PMI unless you refinance. Crazy isn't it.
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Old 01-22-2009, 06:47 PM
 
Location: Charlotte, NC
7,041 posts, read 13,822,567 times
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In my experience, the only way to remove PMI is to refinance. Not sure that your value will increase that quickly to try to do that within months of buying the house. (remember, the mtg co. will usually use the purchase price as the predominant value). I would recommend waiting at least a year. (maybe more)
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Old 01-22-2009, 07:01 PM
 
1,316 posts, read 3,651,129 times
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Quote:
Originally Posted by colleenlit View Post
Hello - I'm calling on all real estate/mortgage professionals here. Several years ago I had an appraisal done on a home I'd owned for a few years that had appreciated and was able to eliminate the pmi I was paying with the increased appraised value putting me at the magic 80/20 ltv ratio.

So..I am closing on an incredible deal I got from a builder on an already built home who is closing out this phase in a fabulous new development. Looking at sales prices from zillow (which of course I know is not exactly scientific) I've found six sales in my neghborhood in the last six months, ranging in price from 375k-450k. My sales price is 293k and I'm putting 5% down.

So, Please give me opinions on whether it would be worth it for me to pay for an appraisal sometime after closing and see if it would appraise high enough to get rid of PMI. If not soon after closing, do you recommend a period of time for "seasoning" the mortgage before getting an appraisal? Months? Years? Of course I'll keep an eye on sales prices in my neighborhood as well!

Thanks for any opinions!

colleen
why is he letting your house go so cheap- today that may be all its worth...house prices are headed down further not up...kiss that 375 bye bye..
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Old 01-22-2009, 07:03 PM
 
Location: Charlotte, North Carolina
5,137 posts, read 15,829,321 times
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it wont be worth it as most lenders will still require you to pay the PMI

Also, if you plan on hiring an appraiser...make sure it is approved by the note holder otherwise you'll be paying for another one
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Old 01-22-2009, 07:04 PM
 
677 posts, read 2,092,211 times
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It sounds like you have no yet bought the house yet.

When you go through the mortgage process the mortgage company will appraise your home based on comps alone, or sometimes they will send an appraiser to your home to manually appraise the property.

Considering that the lowest comp (assuming it really is a comp) at 375k and you're buying at 293, that's an immediate LTV of around 72% before any money down. Since yours is so much lower, I'm guessing that the comp at 375k isn't really a good comp, or you're getting a hell of a deal.

But if your LTV after the initial appraisal is lower than 80% then you shouldn't have to pay pmi at all from the start.

Someone correct me if I'm wrong.
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Old 01-22-2009, 07:07 PM
 
Location: Charlotte, North Carolina
5,137 posts, read 15,829,321 times
Reputation: 1008
A lender will always use the lower of the two values

1. Purchase Price
2. Appraised value

Quote:
Originally Posted by MrConfigT View Post
It sounds like you have no yet bought the house yet.

When you go through the mortgage process the mortgage company will appraise your home based on comps alone, or sometimes they will send an appraiser to your home to manually appraise the property.

Considering that the lowest comp (assuming it really is a comp) at 375k and you're buying at 293, that's an immediate LTV of around 72% before any money down. Since yours is so much lower, I'm guessing that the comp at 375k isn't really a good comp, or you're getting a hell of a deal.

But if your LTV after the initial appraisal is lower than 80% then you shouldn't have to pay pmi at all from the start.

Someone correct me if I'm wrong.
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Old 01-22-2009, 07:27 PM
 
1,117 posts, read 2,603,988 times
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Quote:
Originally Posted by MrConfigT View Post
But if your LTV after the initial appraisal is lower than 80% then you shouldn't have to pay pmi at all from the start.

Someone correct me if I'm wrong.
Like Chicagocubs said previously, it is my understanding that the 'value' in the 'loan to value' equation defaults to what the buyer ends-up paying for the property. Regardless of how much of a deal they got etc, it's just the way it is - my mortgage broker told me that.

Assuming that the selling-price is the 'value' that is taken, I wonder if you could use that rigidity to your advantage and come to some arrangement with the seller that benefits both parties? What would happen if they inflated the selling-price back to $393k and you signed an agreement that promised you a 'cash back' signing bonus of $100k - could you use this as your 20% downpayment and avoid PMI?
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Old 01-22-2009, 07:30 PM
 
Location: Charlotte, North Carolina
5,137 posts, read 15,829,321 times
Reputation: 1008
no cash back at closing

it would also be consider fraudelent if the lender didnt know about it either.

the best thing to do is to wait 6-12months and call the servicing department to ahve them send an appraiser to review the property

Quote:
Originally Posted by Megax View Post
Like Chicagocubs said previously, it is my understanding that the 'value' in the 'loan to value' equation defaults to what the buyer ends-up paying for the property. Regardless of how much of a deal they got etc, it's just the way it is - my mortgage broker told me that.

Assuming that the selling-price is the 'value' that is taken, I wonder if you could use that rigidity to your advantage and come to some arrangement with the seller that benefits both parties? What would happen if they inflated the selling-price back to $393k and you signed an agreement that promised you a 'cash back' signing bonus of $100k - could you use this as your 20% downpayment and avoid PMI?
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