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PMI question?

I'm buying a house for 110k, it appraised for 120k. Will this erase any pmi? by marylouis23423724 from Chelsea, New York. Mar 13th 2015 Reply


William J Acres (William_Acres)
#2 ranked lender in Arizona - 7,797 contributions

No.. your PMI is based on the LOWER of the sale price or apprised value.. to avoid PMI, you will need to put $22,000 ($110,000 X 20% = $22,000) There are other options for paying PMI such as lender paid or upfront, but make no mistake, regardless of how it's presented to you, it's YOU paying the MI.. but not to fear.. MI premiums are actually pretty low if you have a good credit score, and once you have paid for a minimum of 2 years, and once your equity reaches 20%, you can contact your lender and request the MI be removed, and you wont have to refinance to do it.. I'm a Broker here in Scottsdale AZ and I only lend in Arizona. If you or someone you know is looking for financing options, feel free to contact me or pass along my information. William J. Acres, Lender411's number ONE lender in Arizona. 480-287-5714 WilliamAcres.com

Mar 13th 2015
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Phil Dumouchel (PhilDu)
#32 ranked lender in South Carolina - 2,224 contributions

No, your downpayment and any required PMI is based on the lower of your purchase price or the appraised value vs. your loan amount. Once you close, what you paid is the value of your home unless another similar one sells for more AFTER you buy yours.

Mar 13th 2015
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Sean Young (SeanYoung)
#2 ranked lender in Colorado - 1,106 contributions

No, but you may have options to buy out of the mortgage insurance on a conventional loan as a onetime fee paid at closing. It can either be paid by you as a closing cost or if there is room you can increase your interest rate and receive enough of a credit to pay it. The cost of the buyout is a percentage of the loan amount as is based heavily on your credit score and loan to value. Your loan officer will run some numbers to see how much it will cost to buyout of mortgage insurance, but there is a chance you may not be able to if the percentage is too high since lenders cannot charge over a certain amount in fees including the buyout of mortgage insurance. FHA will have mortgage insurance no matter what and VA has no mortgage insurance. You may also want to check into some local programs, there may be options with 3% down and no mortgage insurance. Speak with a local lender and have them review your information so they can present you with all of your options. Best wishes, Sean

Mar 14th 2015
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Jericho Cherry (Jerichocherry)
#58 ranked lender in Virginia - 1,107 contributions

The simple answer is NO. Buying a house below appraised value will NOT erase your PMI.

Mar 14th 2015
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Ralph Richard Guertin (ralph@absolutelowrates.com)
#136 ranked lender in Florida - 637 contributions

No lender will base the loan to value program on the lower of the two and when you are at 78-80% LTV you can call your lender and inquire about the process but as long as it is not FHA as that PMI is now for the life of the loan...

Mar 17th 2015
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