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Re-appraising house after value increase to get rid of MIP/PMI

H

homestarmy

Diamond Member
I was lucky to buy my house right before a boom in value. It is mortgaged at about $120k, and to get rid of my mortgage insurance, I need to pay the mortage for 5 years because it is an FHA mortgage (over halfway into that) and drop to or below 78% loan to value. That would mean that if I pay my mortgage normally, the house would need to be worth a little over $140k at that time, but it is worth more like $180k - $200k already.

So all I would need to do is have it reappraised, send that over to the mortgage people and be set, no? Has anyone had to do this? Are there any complications of doing it this way?
 
I found this... is it true?

FHA will determine when a borrower has reached the 78% loan to value
ratio based on the lower of the sales price or appraised value at origination.
New appraised values will not be considered.
Click to expand...

If that is the case, I am thinking of taking out big student loans to get below.
 
I'm essentially in the same boat...

And, unless I'm misunderstanding something, the FHA contract requires that you pay PMI for 5 years regardless of how much you've paid down (unless of course you pay off the entire loan, or get another).

 
I've done it (obviously not an FHA loan). We bought our house before a boom in 1997...after a reappraisal, the house was worth 50% more than we paid for it a year later. As a bonus, the prime lending rate had dropped a bunch too and we went from a 30 year to a 15 year and our payments went up like $50/month.
 
You pretty much have to refinance to get rid of the PMI. With higher rates now it probably isn't worth it anymore. We refinanced when rates were near bottom going from 30=>15 years and no more PMI. Our P&I went up $50 but total payment dropped a couple bucks with no more PMI. Shaved 12 years off total repayment period.
 
Originally posted by: homestarmy
Why would I need to refinance?

That wouldn't be a good idea as my rate is 5.25%.
Click to expand...

Because the lender makes the rules and they don't have to drop the insurance because you got an appraisal.
 
Be careful with that. The housing marked is in the toilet right now. What the bank says your house is worth may not be anywhere near what it will actually fetch.

That just happened to me. I ended up selling my house at 80% of it's appraised value after nobody touched it for almost a year 🙁
 
Should have worked with a better loan officer in the first place so you could have gotten out of PMI all together.

But yes, if to refi and your loan amount is now less than 80% of the value of the home, you then don't have to pay PMI any more normally.
 
Refinance and get a new loan. That should do it. Call your loan officer at the bank. I'd do it now, before interest rates go up.
 
Originally posted by: BlueWeasel
Originally posted by: FrankyJunior
Should have worked with a better loan officer in the first place so you could have gotten out of PMI all together.
Click to expand...

How would he have done that?
Click to expand...

80/10/10 or and 80/20 loan... 80% standard mortgage plus either a 20% equity loan or a 10% equity loan plus 10% down.
 
Originally posted by: EatSpam
80/10/10 or and 80/20 loan... 80% standard mortgage plus either a 20% equity loan or a 10% equity loan plus 10% down.
Click to expand...

Oh yeah, I knew about the second mortgages to counter PMI, I just thought he was referring to something else.

For equity loans, what interest rates and length are typical? Are they the same as the 80% loan?
 
Originally posted by: dirtboy
Originally posted by: homestarmy
Why would I need to refinance?

That wouldn't be a good idea as my rate is 5.25%.
Click to expand...

Because the lender makes the rules and they don't have to drop the insurance because you got an appraisal.
Click to expand...

No, FHA makes the rules in my case. If it drops below 78% loan to value, they have to drop it, and I do believe it can be requested below 80% also.

My question is whether it can be re-appraised. But from what I quoted above, it doesn't seem that that would work.
 
Originally posted by: Fritzo
Be careful with that. The housing marked is in the toilet right now. What the bank says your house is worth may not be anywhere near what it will actually fetch.

That just happened to me. I ended up selling my house at 80% of it's appraised value after nobody touched it for almost a year 🙁
Click to expand...

I understand that. I have no reason to sell my house and am not looking to do so. I would just want it to be appraised to get rid of my mortgage insurance. Paying $50 a month is ridiculous.
 
Originally posted by: EatSpam
Refinance and get a new loan. That should do it. Call your loan officer at the bank. I'd do it now, before interest rates go up.
Click to expand...

If I refinance now, I'd probably get around 6%. Going from 5.25% to 6% would cost me roughly $75 a month. Even though I'd pay $50 less, I would still be paying more. Plus there could be closing costs etc involved. Not a good idea, but correct me if I am wrong.
 
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