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The original was posted on /r/lifeprotips by /u/peachymoonoso on 2023-09-13 06:57:32.
I bought a duplex a little over 2 years ago and did significant upgrades. I was told that providing proof of these upgrades would be enough to get the PMI removed. Apparently I was wrong.
Today my mortgage company sent me this in response: “Currently your LTV is 80.56%. Additionally, your loan is seasoned more than two years. As your loan secures an Investment property and/or Multi-unit property, the LTV must be at 65.00% or less to qualify for PMI removal based on the Original Value of your loan, via paying down the principal balance of your loan.”
They want me to pay $755 for an appraisal with a company they send out. Two questions, does this mean if the home has enough equity that they will drop the PMI? And does it drop off when I get to 80% (which is sometime before next summer).
I appreciate any help. This is all confusing to me.
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From what you said, it’s not 80% loan to value, it’s 65%. Assuming the appraisal comes back with a value that brings your loan to value ratio down to 65% or less, they should remove your PMI. Find out what that number is and think about whether that would be a reasonable expectation from an appraiser. I will say my experience with bank chosen appraisers has been less than stellar, so I would be hesitant to spend the money on one unless I was fairly certain they basically had to exceed the value I expected.
You can look up previous sales in the area, which is what they’re going to do, so you can see what comparable sales they’re going to use to value your duplex, and you can also be ready to challenge any comps you feel unfairly lower the number. The realestate agent you used to purchase the property should be happy to find and send you comparable sales. They should also be able to give you some idea of the impact of your improvements and the change in the market on the value of your property. It’s pretty standard stuff. If not, they’re not a good agent and you should not use them again.
Just remember that you’re ultimately spending $755 to get someone the bank contracts with to protect the bank’s investment. They will likely be conservative, and sometimes wholesale make things up. If you’re serious about this, I would be prepared to get another appraisal from someone else to challenge the bank’s appraiser, but keep in mind these things cost a thousand bucks a pop, and if you challenge the bank’s appraiser you’re probably going to have to pay for them to go back out again.
You may be better off just paying another several hundred dollars a month directly toward principle in order to get to 65% LTV with your existing appraisal. It all depends on the actual numbers.
