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PMI Question on a Refinance - Definition of "Original Value"
Posted on 6/29/16 at 10:42 am
Posted on 6/29/16 at 10:42 am
When looking at a refinance loan in terms of PMI cancellation, is the "original value" considered to be the appraisal value of the original mortgage or the appraisal done to support the refinance? I am under the impression it is the appraisal to support the refinance loan, but not sure.
The reason I ask, I ran the numbers on my balance a few months back and noticed I'd reached the 80% LTV mark. I attempted to call the bank to ask about the PMI cancellation but couldn't get the person, so I submitted an online request for information. I just wanted to discuss it, but got a formal letter saying I could send them $500 for a new appraisal or wait for the automatic cancellation.
The automatic cancellation section included the date it would automatically drop off along with outstanding balance and the "original value" which was the original appraisal amount, not the appraisal done for the refinance 3 years ago. The difference in the LTV based on the two appraisals is 1%.
I don't think its worth paying $500 for a new appraisal, but if the automatic drop off date should be based on the refinance appraisal instead of the original loan appraisal, then I plan to request that they revisit that date, as I'm thinking it should happen a few months earlier than what they stated.
The reason I ask, I ran the numbers on my balance a few months back and noticed I'd reached the 80% LTV mark. I attempted to call the bank to ask about the PMI cancellation but couldn't get the person, so I submitted an online request for information. I just wanted to discuss it, but got a formal letter saying I could send them $500 for a new appraisal or wait for the automatic cancellation.
The automatic cancellation section included the date it would automatically drop off along with outstanding balance and the "original value" which was the original appraisal amount, not the appraisal done for the refinance 3 years ago. The difference in the LTV based on the two appraisals is 1%.
I don't think its worth paying $500 for a new appraisal, but if the automatic drop off date should be based on the refinance appraisal instead of the original loan appraisal, then I plan to request that they revisit that date, as I'm thinking it should happen a few months earlier than what they stated.
2
Posted on 6/29/16 at 1:34 pm to DingLeeBerry
I would think that any appraised value discussed should be the most recent appraisal, not one done a few years prior....
Posted on 6/29/16 at 1:54 pm to DingLeeBerry
quote:
When looking at a refinance loan in terms of PMI cancellation, is the "original value" considered to be the appraisal value of the original mortgage or the appraisal done to support the refinance?
The appraisal to support the refinance is used. A refinance is a completely different loan and cannot use supporting documents from original unless very very rare circumstances
quote:
I just wanted to discuss it, but got a formal letter saying I could send them $500 for a new appraisal or wait for the automatic cancellation.
Lender isn't required to cancel loan until 78%. At 80% LTV, you can request and they can ask for things like appraisal etc
quote:
the original appraisal amount, not the appraisal done for the refinance 3 years ago.
How would the bank even have this for a refinance? Also, the appraisal for a mortgage has to be up to date so they couldn't even use a 1 year old appraisal as the valuation tool
This post was edited on 6/29/16 at 1:55 pm
Posted on 6/29/16 at 2:16 pm to GenesChin
quote:
Lender isn't required to cancel loan until 78%. At 80% LTV, you can request and they can ask for things like appraisal etc
I wasn't sure exactly how it worked, so that's why I wanted to try to talk to them on the phone to find out what the options were. They provided me with the date it would automatically cancel. They also provided the current balance plus the appraised value, but used the appraised value from the original loan.
quote:
How would the bank even have this for a refinance? Also, the appraisal for a mortgage has to be up to date so they couldn't even use a 1 year old appraisal as the valuation tool
I'm not sure where the original loan appraised amount came from. It was originally with Wells Fargo. When I refinanced, it was with a local bank and then they sold it to someone else.
Posted on 6/29/16 at 2:26 pm to DingLeeBerry
How much is your PMI and how much do you owe until you hit 78-80%? How many months until you would otherwise hit the point of no longer needing it?
I wouldn't pay the $500 towards an appraisal if you have less than $2000 of principal left to get there anyway. If you pay $500 towards an appraisal that money is gone and all it saves you is the PMI until your normal point of no longer paying it. I'd rather pay off more principal to hit that point faster, that way you aren't "spending" any money .
I wouldn't pay the $500 towards an appraisal if you have less than $2000 of principal left to get there anyway. If you pay $500 towards an appraisal that money is gone and all it saves you is the PMI until your normal point of no longer paying it. I'd rather pay off more principal to hit that point faster, that way you aren't "spending" any money .
Posted on 6/29/16 at 2:46 pm to baldona
That's the point. It isn't worth forking over $500 for an appraisal at this point to try to get it dropped sooner. But, I believe the date they provided me that it is scheduled to drop is incorrect and should be a few months sooner because they used the wrong appraisal amount to calculate it.
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