PMI Question

[Ausfarm]

I am getting ready to close on a construction loan.  The lender just told me that if our appraisal had just been $3000 higher, we wouldn't have to get PMI.  We could come to the closing table w/ the $3000 and avoid the PMI.  He told me our PMI would be like $60/month.  I'm wondering if we don't pay the $3000 at closing, but pay it to principle w/in the 6 months of closing will that extinguish the PMI?

[Anonymous]

Call your lender back and have them to call whoever did your appraisal and see if they can adjust it. I went through the same thing on my apprasial but the lender called and had the appraisal co to adjust the figures. It's a long shot but worth a try!

[athensguy]

If it's a Conventional loan, and you pay it to 78-80% of the appraisal, then PMI should go away.

[DallasLoanGuy]

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Bran9192 wrote:

Call your lender back and have them to call whoever did your appraisal and see if they can adjust it. I went through the same thing on my apprasial but the lender called and had the appraisal co to adjust the figures. It's a long shot but worth a try!

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Any reputable lender wouldn't do this. Reputable appraisers wouldn't either.

[ShanetheMortgageMan]

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DallasLoanGuy wrote:

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Bran9192 wrote:

Call your lender back and have them to call whoever did your appraisal and see if they can adjust it. I went through the same thing on my apprasial but the lender called and had the appraisal co to adjust the figures. It's a long shot but worth a try!

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Any reputable lender wouldn't do this. Reputable appraisers wouldn't either.

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Yup, it's called "steering" and it's considered fraud... your lender may give an estimate of the property's value to the appraiser but cannot make payment on the appraisal contingent upon getting a certain value, or refuse to send future business to the appraiser if a certain value isn't reached, etc.  Now if there are material items that would give the home more value that the appraiser missed in the original appraisal, that is worth the appraiser taking a second look at the value.

[Anonymous]

The lender was quicken loans and the guy that did my appraisal was not from the area ( out of state )and didn't take into consideration the $$$ of improvements that we had done. Further more he used the county assessments to come up with his figures so the lo I was working with sent another guy to do the appraisal over ( which included the improvements ) so the new figures were much better. They were pushing me for an  ARM loan that I refused to do so I refi'd with another mortgage co.

All I'm saying is who ever did your appraisal may not have included some details of the home/property that would increase the appraisal/value of your home.

[ShanetheMortgageMan]

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Bran9192 wrote:

The lender was quicken loans and the guy that did my appraisal was not from the area ( out of state )and didn't take into consideration the $$$ of improvements that we had done. Further more he used the county assessments to come up with his figures so the lo I was working with sent another guy to do the appraisal over ( which included the improvements ) so the new figures were much better. They were pushing me for an  ARM loan that I refused to do so I refi'd with another mortgage co.

All I'm saying is who ever did your appraisal may not have included some details of the home/property that would increase the appraisal/value of your home.

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Now that you've explained the situation in more detail it sounds better.  There has been times where I've ordered appraisals and the value comes in way off, so we order a second one to get another opinion and the value comes in more accurately... so we use the more accurate appraisal.

[Anonymous]

You do have a couple of choices if you cannot get the current appraiser to acknowledge the missing details- either bring in the extra $3000, OR, do not spend $3000 in the construction of the house, OR, as you suggested, pay it over the construction period. The lender will only get MI if, when the appraiser has confirmed that it's done and that at least the same value is there, the loan amount is over the 80% threshhold. You should also have at least a 5-10% contingency line in your building budget for overruns, and if you don't use it, you won't be paying on it over the 30 years, or whatever. You will know at modification how much was truly spent and how much you owe as you will sign a final note or modification agreement once your builder is done and you have your Certificate of Occupancy. They must do this because if you don't use all the money allotted to build the house, then you shouldn't have to pay on it for the rest of the loan's life.

[Ausfarm]

Thanks mortgagechick!