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Question about PMI
Posted on 10/26/10 at 11:25 am
Posted on 10/26/10 at 11:25 am
Is PMI cancelled once you've reached 20% equity of the appraised value of the home or 20% of the ammount of the loan?
If I'm about to purchase a house that appraises for 280K to 300K for 210K, would I have to pay PMI?
If I'm about to purchase a house that appraises for 280K to 300K for 210K, would I have to pay PMI?
4
Posted on 10/26/10 at 11:27 am to will1883
quote:
Is PMI cancelled once you've reached 20% equity of the appraised value of the home or 20% of the ammount of the loan?
It doesn't automatically happen. I think you have to wait 2 years and pay for the appraisal.
quote:
If I'm about to purchase a house that appraises for 280K to 300K for 210K, would I have to pay PMI?
If you are financing more than 80% of the purchase price, yes.
Posted on 10/26/10 at 12:55 pm to will1883
I'd have to re read my mortgage docs to be sure but i believe mine says they cancel PMI automatically on the scheduled 20% payed off date. That date was set when i signed the papers. Now, if i pay extra at any time and get it to 20% sooner than that date i have to be proactive and make a call to cancel it.
Posted on 10/26/10 at 2:12 pm to Martavius
quote:
If you are financing more than 80% of the purchase price, yes.
That's incorrect. If you are financing more than 80% of appraised value. There's a difference.
If he purchases the house and finances @ 210k and the house appraises for 300k then he would not have to have PMI. People sell houses for less than they're worth all the time. The bank only cares what it's worth (Loan to Value).
This post was edited on 10/26/10 at 2:15 pm
Posted on 10/26/10 at 2:16 pm to DoubleDeuce
quote:
That's incorrect. If you are financing more than 80% of appraised value. There's a difference.
Nope. You won't even know what the bank appraisal is until after closing. That is unless it won't appraise for purchase price then there is no closing.
I can tell you this from first hand experience. PMI will be based on the % of purchase price.
quote:
The bank only cares what it's worth (Loan to Value).
And for the bank's purposes, the value in that equation is the purchase price.
This post was edited on 10/26/10 at 2:20 pm
Posted on 10/26/10 at 2:26 pm to Martavius
If your getting a 300K appraisal for a 210K purchase,
Id re-think the expertise of that appraiser....
Id re-think the expertise of that appraiser....
Posted on 10/26/10 at 2:28 pm to Drop4Loss
People put way too much weight on appraisals. The value of a house is what someone is willing to pay for it. Appraisals are just another tool used by a bank to assess risk.
Posted on 10/26/10 at 8:16 pm to Martavius
quote:
Nope. You won't even know what the bank appraisal is until after closing
Funny my LO at Chase called me today to tell my my appraisal came back and that I was good to go on my refi.
Posted on 10/27/10 at 6:38 am to lsufan1971
quote:
Funny my LO at Chase called me today to tell my my appraisal came back and that I was good to go on my refi.
Why Chase? Better rate?
Posted on 10/27/10 at 7:47 am to lsufan1971
quote:
Nope. You won't even know what the bank appraisal is until after closing
FALSE...the bank won't loan you the money to close if it doesn't appraise for the right amount
Posted on 10/27/10 at 8:24 am to dillpickleLSU
quote:
FALSE...the bank won't loan you the money to close if it doesn't appraise for the right amount
Did you read what I wrote? Of course they will tell you if your appraisal came back OK or not for the loan to go to closing.
What they won't tell you is "Good news, your appraisal came in way over your purchase price so you don't have to pay PMI!"
Posted on 10/27/10 at 10:36 am to Drop4Loss
quote:
If your getting a 300K appraisal for a 210K purchase,
Id re-think the expertise of that appraiser....
While I suppose I agree (is there a sillier racket than real estate appraise?, but I digress). How is such a skewed appraisal doing anything but positively affecting the person getting the appraisal?
Posted on 10/27/10 at 12:02 pm to Y.A. Tittle
quote:
is there a sillier racket than real estate appraise?
Required college degree
3 years as an apprentice
Over 5k in strictly appraisal education
I like to think my profession is not that silly.
and to answer your question....a Realtor.
Posted on 10/27/10 at 12:23 pm to I Love Bama
It wasn't a comment on requirements for entry into the profession.
Posted on 10/27/10 at 3:04 pm to Martavius
quote:
People put way too much weight on appraisals. The value of a house is what someone is willing to pay for it.
I'm surprised at how few people understand this concept.
Posted on 10/27/10 at 3:14 pm to will1883
I can only speak from my experience -
PMI is insurance for the loan, not the house. Why the customer has to pay the premiums to protect the bank seems odd to me, but...
quote:I remember asking the bank this specific question. The answer is "20% of the purchase price." Consider the converse - what if the appraisal goes down in the future? you wouldn't want the bank to come back and start charging PMI again based on the appraisal -
Is PMI cancelled once you've reached 20% equity of the appraised value of the home or 20% of the ammount of the loan?
quote:yes, if your down payment is less than $42,000 (20% of 210K)
If I'm about to purchase a house that appraises for 280K to 300K for 210K, would I have to pay PMI?
PMI is insurance for the loan, not the house. Why the customer has to pay the premiums to protect the bank seems odd to me, but...
Posted on 10/27/10 at 3:18 pm to will1883
Maybe it isn't consistent for all banks, but Martavius is right. You will pay PMI if you finance more than 80% of the purchase price. Also, there is usually a minimum amount of time you can keep PMI (20 to 24 months I believe) even if you pay it down to under 80% during that time.
Posted on 10/28/10 at 2:39 pm to eelsuee
quote:
Why Chase? Better rate?
Have my current with them. They offered me $1600 closing. I only plan to be in the house another 3 years so it made since. I could have gotten a better rate somewhere else but since I am a short timer in the house I took the lower closing costs. Saving about $500 a month after refi so it pays for itself quickly.
Posted on 10/28/10 at 8:43 pm to Martavius
quote:
What they won't tell you is "Good news, your appraisal came in way over your purchase price so you don't have to pay PMI!"
I got my appraisal in writing before closing, so I knew exactly what it appraised for. If you can do simple math, you can figure out whether you should be paying PMI. I don't get what you're trying to say.
Posted on 10/28/10 at 8:45 pm to Loubacca
quote:
People put way too much weight on appraisals. The value of a house is what someone is willing to pay for it.
This is true. However, a bank won't loan you more than the appraisal says the house is worth; so it does have relevance.
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