Home addition/PMI

If you haven't had your home for at least 5 years you can't avoid PMI. It's mandatory. Not sure if this answers your question though.

Eta: this is for FHA.

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We just did the same thing and the appraiser as well as the bank didn't value our improvements anywhere near their cost. Like in the 20% range.

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Why's that?

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re: Home addition/PMI (Posted on 2/22/13 at 12:33 p.m. to OldSouth) quote: Why's that? Refi in 2009, appraised at 185K. Since, we: replaced vinyl flooring with ceramic tile in kitchen, bathrooms added deck, screened-in porch new windows new roof new gutters, downspouts new carpet in bedrooms added landscaping Spent 45K, appraisal last month came back 191K.

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Do you think this is accurate? Do you not have any comps in last 6 months to back your reasoning?

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Refi in 2009, appraised at 185K.

Since, we:

replaced vinyl flooring with ceramic tile in kitchen, bathrooms

added deck, screened-in porch

new windows

new roof

new gutters, downspouts

new carpet in bedrooms

added landscaping

Spent 45K, appraisal last month came back 191K.

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We did the same thing between 2010 & 2012.

2010 Appraisal- $296,000

added 16x22 on to our current 10x22 slab patio and pergola covering the whole addition, changed the flooring in the living/dining from carpet to hardwood

2012 appraisal- $296,000

I looked on both appraisals, and they both noted that I had a patio, and assigned that patio a value of $5,000.

When they appraise for a refi, they don't take into account all those things that add value like new roof, gutters, patio, etc. If you look on your appraisal, they probably didn't even note all of your improvements since they didn't add any sq ft to the house, and that's basically all those refi appraisals are based on- sq ft vs comps.

In your case other factors come into play other than the improvements you made. The main one being time and the market downturn that took place. It's not as though you had an appraisal done right before and right after the improvements a month apart.

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If you want the additions or upgrades, do them

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I need to additions to stay in the house with a growing family. I'm hoping that dropping PMI will be an added bonus resulting from the addition.

You really would need to consider what kind of upgrade to determine what will increase your value. Sq footage and bath count is the only real bang for your buck. If you are not in a subdivision, then the appraiser can pull from a reasonable distance, use like sized comparables, etc. But You will not get a $ for $ increase no matter what you do.

Your question is how are you paying for the addition. If you are planning to finance it, then there are several things to consider. Dropping PMI is one, but you realy need to research what your improvements are and are htere homes in the area that are valued significantly higher than yours. You could spend a ton of money on kitchens, baths, etc. Unless you do a ton of the work yourself,you may be better off selling and looking for a bigger home, let someone else take the hit for the improvements.

Consider this; a remodel is generally more expensive, unless it is just cosmetic. If you add sq footage, you could spend more than $100-$120 a sq ft for the addition and improvements if a contractor does it. Will your house appraise for that now?

You still haven't told me how you were going to pay for the improvements. Do some research, just be aware that nothing gives you a $ for $ return. If what you say about your neighborhood is true, it is probably older. Unless you are in areas where the land is extremely valuable: Garden District in Baton Rouge, Garden District in N. O., then your overall value will not increase for what you are going to spend.