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re: Question about PMI
Posted on 1/21/20 at 11:06 am to SidewalkDawg
Posted on 1/21/20 at 11:06 am to SidewalkDawg
quote:
The land was purchased and paid off at $50,000. The home is being built on that land at a total value of $300,000.
The home is being built at a COST of $300K, not value.
quote:
When everything is finished. Assessed value of total property is $350,000.
The assessed value (tax) is irrelevant. All that maters is the appraisal in regards to your LTV being at 80/20 to avoid paying PMI.
Once the house is completed or very near completed your lender will order an appraisal to determine its value. What you paid for the lot and/or to have the home built really doesn’t come into play. It’s all about the final appraised value as that is what the bank will be securing (via a mortgage) to loan you money.
This post was edited on 1/21/20 at 11:07 am
1
Posted on 1/21/20 at 12:24 pm to MikeBRLA
quote:
The assessed value (tax) is irrelevant. All that maters is the appraisal in regards to your LTV being at 80/20 to avoid paying PMI. Once the house is completed or very near completed your lender will order an appraisal to determine its value. What you paid for the lot and/or to have the home built really doesn’t come into play. It’s all about the final appraised value as that is what the bank will be securing (via a mortgage) to loan you money.
This is a 2x close. Don't do this if you can avoid it. Go find a bank that has a 1x close program. The appraisal is upfront. Instead of having to qualify 12 months later when the house is built you do everything up front. You avoid paying closing costs twice this way. As well as the chance that the housing market in your area tanks and you have to bring more cash to the bank to get the LTV you desire. This way you know upfront before the build.
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