PMI Removal from Mortgage

[ccgirl]

I hate appraisals... we bought our house from the original owners (they both died actually). Everything was completely original from 1970 when we moved in 3 years ago. The carpeting, linoleum (in all the bedrooms too!), paint, even the garage door opener (you should have seen the size of that remote!) Anyways, we had to have an appraisal done 2 years after we moved in and by then we had changed all of the flooring, paint & added all new appliances, sinks, countertops, etc. It was appraised at 15,000 LESS than when we bought it. I just don't get it either

Your low appraisal has more to do with the value of houses in general than your improvements. Buyers market type of value.

I have watched a house we owned in FL go up 4X in value in 2006 and down to double value now. I feel so bad for those who bought in 2006. Their houses are worth half of what they paid.

Yes, exactly. Some people buy houses and assume it will increase in value. Some also assume that if they make improvement the value of the house will rise from when they purchased. That is not, necessarily, the case. The market dictates whether or not the house value rises or falls. That's why so many people are upside down on their mortgages now...the home value fell markedly between they purchased and now.

 

[disneychrista]

In my opinion make home improvements that you want because you want them not because they may or may not increase your homes value.

I need / want to update my kitchen when I am down it will still have the same square footage, same number of cabinets, etc. The only new thing it will have is a dishwasher. I don't expect that the $15k that I will end up spending on this to raise my homes value. But since I don't plan on moving, I am doing the upgrades for me, not for home value.

 

[mrsklamc]

it
yes it does....for certain things, kitchens and baths being two of them

Must depend on your appraiser/area then. As many others have said, here they do not even enter your home to appraise.

 

[budafam]

In my opinion make home improvements that you want because you want them not because they may or may not increase your homes value.

I need / want to update my kitchen when I am down it will still have the same square footage, same number of cabinets, etc. The only new thing it will have is a dishwasher. I don't expect that the $15k that I will end up spending on this to raise my homes value. But since I don't plan on moving, I am doing the upgrades for me, not for home value.

Oh yes, I wouldn't do an improvement just to raise the value of the home... so not worth it! Everything we have done is just because we could no longer stand living in blue swirl carpeting, yellow walls & green floral curtains (I'm not joking, I have pictures!)

 

[GOOFY4DONALD]

Realtor here.

As far as the LTV, they want you to have 20% equity before getting rid of PMI. It is true that the government loans, such as FHA, have a minimum amount of years they want you to pay PMI before eliminating it.

As far as the appraisal, a lot depends on the bank that is backing your mortgage, not so much where you live. The bank will inform the appraisal company if they want them to enter your home or not. While a kitchen/bath remodel will increase the value of your home a bit it really doesn't factor into the appraisal as much as you think it would. It goes more toward the condition of the house. For example, perhaps before the remodel your home would have been classified as "fair" and now it would be "good".

Another poster gave a good recommendation to look at Zillow. While you think you may have great luck because you invested "x" number of dollars in your home; you may be surprised what it appraises at. It does not look at what you paid for the home and add the remodeling money to the resale value. It looks at what homes are selling in your area and compares the square footage, # of bedrooms, # of bathrooms, and condition of your home to those that have sold in your area.

Good luck.

Not to hijack but I have a question. We bought our home 3b/2ba on 5 acres. We paid 15K below appraisal. The house has a full unfinished basement total sq ft 3500 (1750 on each floor). We are in the stages of finishing the basement giving us 3500 sq ft of living space..5 bed/3 full bath + small 6th bedroom or office...2 livingrooms and game room. Now are these the kinds of things that will increase the value?

 

[Dacky619]

Not to hijack but I have a question. We bought our home 3b/2ba on 5 acres. We paid 15K below appraisal. The house has a full unfinished basement total sq ft 3500 (1750 on each floor). We are in the stages of finishing the basement giving us 3500 sq ft of living space..5 bed/3 full bath + small 6th bedroom or office...2 livingrooms and game room. Now are these the kinds of things that will increase the value?

The problem some people have is realizing that there is a difference between an appraisal and the market value. The appraisal is a rough number that the bank looks at to protect itself in the situation that they are stuck selling the house in a short sale situation. This is why some home renovations don't change appraisals (or not as much as people want them to). The work you are doing will very likely have more of an effect of your sale price than it will on the appraisal. As far as how much it changes the appraisal, that is what is being debated here. The problem then (I'm just going to make up numbers here) is if you sell your house for 300K but the bank only approves a loan based on an appraisal of 250k, the buyers would basically be forced to come up with a down payment of 50k.

 

[iheartpeterpan]

Former banker here.

Actually adding usable square footage to your home (as well as adding a bathroom) is the one type of thing that WILL increase your appraisal. If you've done this, and the appraiser does not enter your home and uses old/incorrect information, let them know and ask them to rerun the appraisal. You are paying for it and can point out errors. City records are notoriously wrong.

New granite in the kitchen, new hardwoods MAY increase your appraisal - by hundreds, not tens of thousands of dollars - IF the appraiser enters the home and IF this puts you ahead of your comps in the neighborhood. If everyone else has hardwood and granite it will not make any difference. Paint, a new roof, new carpet and other maintenance items will never add to your value.

 

[Kae]

You don't have to let a Tax asscessor in the house but if your bank is requiring a full in house inspection you will have to let the Appraiser in the house. Drive bys have been the norm the removal of PMI that depends on the lender. You should see what has sold in your area- same # of baths & bedrooms, square footage close in size, age of home within 5 years or so. If there has been quite a few distressed sales that could hurt the value of your home at this time, but if your area is doing ok with sold prices that would be better.

Kae