Question about PMI and refinancing

[Anonymous]

We're in the beginning stages of refinancing our home. Our intention was to plunk down $25k so we could eliminate our PMI and then refinance to a 15-year mortgage. I didn't understand that we'd have to have an appraisal done to eliminate the PMI (naive first-time homebuyer!), and that our "payoff" number would be determined by its appraised value and not the purchase price. We purchased our home in 2009 and prices in our neighboorhood have held steady, but I'm still worried about the appraisal because non-rehabbed houses in our 'hood sell for $100k less and I've heard the appraiser doesn't even go inside the home.

Does anyone have experience with this? Is it in the lender's best interest to be skimpy with the appraisal so that they have to give you a crappy rate and then make you pay PMI forever? We could obviously shop for a new loan, but we'd have to shell out $500 for each new appraisal, correct?

[Anonymous]

We refinanced, put down 20% and did not have to pay PMI. The appraisal was fair. I don't think that appraisers are out to screw you.

Another option is to possibly pay the PMI in one lump sum.

[Anonymous]

the appraisal is based strictly on comps. they will look at similar recent sales only and this will figure above all else. Sorry.

[Anonymous]

When I refinanced my house a few months ago, the appraiser went through the whole house, making notes and taking measurements of everything. It took quite a long time. He then took the information back and reviewed the comps to give us the value of the house. PMI is based on the value of the house. So, when you refinance, you borrow whatever it is you owe on the house plus whatever refinance costs you have. If that amount is less than 80% of the new appraised value of your home, then you don't pay PMI.

[Anonymous]

I should have added that you can borrow less than what you owe and make the rest up with savings in order to avoid PMI. And depending on your credit rating, bank and income, you can take out one mortgage for 80% of the appraised value and another for the difference. The second mortgage will e at a higher rate, but probably not much higher.

[Anonymous]

Anonymous wrote:I should have added that you can borrow less than what you owe and make the rest up with savings in order to avoid PMI. And depending on your credit rating, bank and income, you can take out one mortgage for 80% of the appraised value and another for the difference. The second mortgage will e at a higher rate, but probably not much higher.

Thanks, this is helpful. Our lender also told us the appraiser would come inside the house, which is contrary to what a friend told me. So that makes me feel better. As long as the appraisal isn't significantly lower than what we paid, we should be able to use our savings to meet the 20% equity threshold and then will finance the balance. PMI is such a waste, and it's good to know there's no conspiracy to keep people paying PMI forever.

[Anonymous]

Anonymous wrote:the appraisal is based strictly on comps. they will look at similar recent sales only and this will figure above all else. Sorry.

yes, but being friendly and liking our appraisers favorite football team has helped historically. Not even kidding- he asked what we needed and it came in just at that. So, if you are way off it won't get you there, but if you're close, turn on the charm! (Unless your appraiser is cranky- then nothing works.)

[Anonymous]

Anonymous wrote:

Anonymous wrote:the appraisal is based strictly on comps. they will look at similar recent sales only and this will figure above all else. Sorry.

yes, but being friendly and liking our appraisers favorite football team has helped historically. Not even kidding- he asked what we needed and it came in just at that. So, if you are way off it won't get you there, but if you're close, turn on the charm! (Unless your appraiser is cranky- then nothing works.)

Well, I better make sure my husband is home then! He's the schmoozer in the family.

[Anonymous]

You can take some control of the appraisal process. Call you realtor and ask them to run comps for you. Find the 3 that best match your home with the highest value. Find the 3 worst comps in the neighborhood. Use nothing over 6 months old, 3 months is better.

When the appraiser arrives give him the 3 you consider the best, along with a written rationale as to why they are the best comps to yours. If any of the comps are particularly bad, have a written explanation as to why they shouldn't be used.

Appraisers aren't lazy, but if you can give them paperwork saving them 30 minutes of time, they will use it and you will benefit from it.

[Anonymous]

Appraisers do go inside YOUR Home and carefully evaluate it, but their appraisal value also takes into consideration the comps -- homes that they do NOT go in and carefully evaluate. So while you'll get credit for your nice fancy kitchen or whatever, the house nextdoor that sold for $100k less won't get 'dinged' for not having a finished basement.

Probably not expressing myself well, but don't take the fact that the appraiser spends a long time in your house to mean that your value is goign to be higher - remember, property value = market rate, which is highly impacted by comps

[Anonymous]

We refinanced three months ago. The appraiser spent about 20 minutes inside our house, asked us what we need it appraised at, and ended up appraising it $120K over that amount. He used comps that weren't really true comps (more bedrooms, more extensive remodeling, etc.) I have no idea why, given that there were good comps in our range, but I wasn't going to argue.

[Anonymous]

Anonymous wrote:The appraisal was fair. I don't think that appraisers are out to screw you.

This is hilarious. How could you possibly know this? MAS at it's finest!

[Anonymous]

Anonymous wrote:

Anonymous wrote:the appraisal is based strictly on comps. they will look at similar recent sales only and this will figure above all else. Sorry.

yes, but being friendly and liking our appraisers favorite football team has helped historically. Not even kidding- he asked what we needed and it came in just at that. So, if you are way off it won't get you there, but if you're close, turn on the charm! (Unless your appraiser is cranky- then nothing works.)

Also, consider printing out a list of *real* comparables if you feel the appraiser may not know the neighborhood well enough to do so. We live in a gentrified neighborhood that's several blocks from more marginal neighborhoods in DC, and neighbors on our street have seen appraisals vary as much as 40%. Ever since the appraisal process was "reformed" you see a lot of appraisers coming in from far-flung exurban areas downstate and elsewhere who have no experience with DC neighborhoods, or urban neighborhoods in general for that matter. You can really get screwed over by their inexperience.

[Anonymous]

Anonymous wrote:We refinanced three months ago. The appraiser spent about 20 minutes inside our house, asked us what we need it appraised at, and ended up appraising it $120K over that amount. He used comps that weren't really true comps (more bedrooms, more extensive remodeling, etc.) I have no idea why, given that there were good comps in our range, but I wasn't going to argue.

Can you please share what lender you used? thanks

[Anonymous]

Can anyone recommend an appraiser for the Alexandria area of FFX Co?