Can a new appraisal shorten the time needed to remove PMI?

9 Replies

I am going to try my best to explain my scenario and appreciate any responses.

I recently bought a home for 200k and put 5% down on a 30yr conventional loan.  My wife and I put about 40k in renovations (vaulted ceilings, converted half bath to full, remodeled other full bathroom, new kitchen counter tops).  I believe that these projects have increased the value, but probably not high enough to remove pmi.

Our current appraisal was for 200k. I am wondering if I were to get a new appraisal and it was appraised for 210k (not enough to remove pmi) would that be credited on my current loan and count as new equity? At the current rate my PMI will remove after 10 years of payments, but I am thinking a 10k increase in appraisal would reduce that to maybe only 5 years. I am not looking to refinance, just wondering if a new official appraisal value could be added to current loan. With current improvements it most certainly has gained some value.

I have tried many variables of google searches to find an answer to no avail. Thanks!

@Aaron Jones It's possible. I would just ask your loan officer, there may be a rule on a certain amount of time passing before a new appraisal can be ordered to remove PMI.

No, there is no "partial credit".  Two options:

You pay down the loan to $160k, 80% of purchase price.

You get an appraisal that shows current value puts your loan balance at less than 80% (75% for first 3-5 years I think).

The value has to be at least 20% higher than your mortgage. Some want 25% +. Not sure about min requirements, I have seen people try PMI removal every year in CA until same lender decided there is enough equity to approve the removal request.

My question is do you have permits on bath and recorded in the county tax records as improvements?

If you know for sure it's going to come up short, I wouldn't waste the money for the appraisal. Wait until you think it's possible, then get it appraised. Assuming your area is appreciating, you'll benefit from that, in addition to the renovations and payments toward principal.

Originally posted by @Sam Shueh :

The value has to be at least 20% higher than your mortgage. Some want 25% +. Not sure about min requirements, I have seen people try PMI removal every year in CA until same lender decided there is enough equity to approve the removal request.

My question is do you have permits on bath and recorded in the county tax records as improvements?

 Yes we paid contractors who obtained the appropriate permits.

Originally posted by @Aaron Jones :

I am going to try my best to explain my scenario and appreciate any responses.

I recently bought a home for 200k and put 5% down on a 30yr conventional loan.  My wife and I put about 40k in renovations (vaulted ceilings, converted half bath to full, remodeled other full bathroom, new kitchen counter tops).  I believe that these projects have increased the value, but probably not high enough to remove pmi.

Our current appraisal was for 200k. I am wondering if I were to get a new appraisal and it was appraised for 210k (not enough to remove pmi) would that be credited on my current loan and count as new equity? At the current rate my PMI will remove after 10 years of payments, but I am thinking a 10k increase in appraisal would reduce that to maybe only 5 years. I am not looking to refinance, just wondering if a new official appraisal value could be added to current loan. With current improvements it most certainly has gained some value.

I have tried many variables of google searches to find an answer to no avail. Thanks!

 Hi Aaron,

If you were to refinance, the equity would get you cheaper PMI and possibly a shorter time-horizon before it drops off, however it's generally not worth all the closing costs of a refinance for such marginal benefit.

To echo what others have said, I'd suggest waiting until you believe you have the equity for it to drop off entirely, that way you do not need to incur the costs of a refinance to drop it off entirely. 

Some lenders and by that I mean many... the pmi does NOT drop off on LTV but when the SCHEDULED LTV per amortization were to occur. So if 45 months from now the LTV reaches the designated amount on regular payment schedule thats when the PMI stops.

It DOES matter if you send extra principal payment(s) etc. or get appraisal etc.

Some have no issue reviewing for ending PMI based on appraisal or extra principal payments but some do. So definitely spend some time calling the numbers on your docs finding out.

Above post correction

DOES NOT* matter

Cannot edit on iphone right now for some reason.

just got mine removed on Oct. 16th for my Nov. payment. Bank wanted appraisal to be 75%. Been in house 4 years. Paid $450 for appraisal and i knew if it didnt make it to 75% it would be close. Mine came back at 74%, but i had planned to take a heloc if needed to make up 3-5%.

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