PMI Removal from Mortgage

[Dacky619]

1st, every appraisal is done differently, the house we bought last August, they didn't even enter the house. They checked out the outside and looked at square footage/number of beds/baths and such. My Brother just renovated a house, and for that loan, the appraisal was more detailed (looking at how the house will be after the work is done), but I don't think a new kitchen will do anything for the appraisal.

As far as the 20%LTV, you might want to check with your mortgage company about one thing, most of them (depending on the type of loan) have a minimum length for the mortgage insurance payments. If we went with FHA, I think they said we would have to pay that premium for a minimum of 5 years. Snce we took a conventional loan, we are required to pay it for 2 years. The only way we could avoid that, was to put 20% down. After 2 years, we can request it be dropped if we are at 80% (getting the new appraisal). Your mortgage might be different, but it is something you have to check out.

 

[HeyIt'sMe]

We had an appraisal done last year when we re-financed our mortgage. The appraiser did come in the house and measured the rooms.

One thing I'll say about our appraisal ---- the appraiser sure got some things wrong. The report showed things that we didn't have --- granite countertops (not yet but someday!), a double oven (no, it's an oven plus a storage drawer), and a sprinkler system (???). Plus, she had included a picture of someone else's bathroom in our report.

 

[Mickeyluver37]

But I would think that going from a 1940's kitchen that was 10x10 to an open kitchen with stainless steel appliances, hardwood floors, granite countertops and custom cabinets would definitely increase the value of my home, no?

You are correct. We just had an appraisal done last week and there is a different configuration for modern vs. superior kitchen. The most important factors are above grade square footage and number of bathrooms/bedrooms. We have a completely finished 1200 sq. foot walkout basement with a bedroom and full bath. That only adds $10,000 to the appraisal. One of the houses on the market in our neighborhood has a superior kitchen. In the comps- they deducted $10,000 from our house as compared to that one.

You are definitely getting conflicting advice here- call an appraiser and ask them the process before you hire them. I made sure I was getting someone to come Inside and do measurements and take pictures and issue a full line by line report- it was $300. Small price to pay to get it done right the first time.

 

[taylor3297]

As a rule, the most value returned from renovating a home comes in the kitchen. According to one national survey, kitchen remodels returned an average of 88% of the investment. In other words, a $10,000 kitchen remodeling project would add approximately $8,800 to the value of the home. Bathrooms were second, returning 85%.

http://greenappraisalgroup.com/gpage3.html1.html

Thought I would share.

 

[DawnM]

The appraiser who came to our house said he didn't care about upgrades unless they added square footage.

He only calculated how many bathrooms had working sinks, toilets and tubs.....the one that was new/remodeled didn't count as any more.

OP, you need to run some comps for recently sold properties in your area. That is was an appraiser will do.

What other homes with similar square footage, same # bedrooms, bathrooms, land were sold and for how much.

Don't automatically assume yours will be appraised for the highest either. I was very surprised at how they calculated our Comps.....

Just be prepared to get a low ball appraisal and be out the $400 or whatever it costs to get. Banks are far more apt to low ball the amount than they used to be.

Dawn

 

[mlulrich]

Just wanted to second the opinion to check on your type of mortgage - the first loan we had on our home was an FHA mortgage - we bought our home as a foreclosure, and upon purchase had quite a bit of equity. FHA loans require that PMI be paid for the first 5 years of the loan, so we decided to refinance to a conventional loan. We were able to refinance with a lower interest rate, drop our PMI, and decrease to a 20 year term -- and our monthly payment is CHEAPER than with the FHA loan

 

[SaraJayne]

Not really true. Appraisals involve measuring interior room dimensions and 'counting' how many bedrooms/bathrooms. An appraiser needs to be inside in order to do that.

Don't expect kitchen and bathroom remodels to increase the value of your home for appraisal purposes. It won't really matter that much, because every home should have a kitchen and some bathrooms. The 'newness' of the fixtures won't really come into play...only the actual features of the rooms when comparing to like properties.

For example, a bathroom with a tub/shower combination may be worth more than one with only a shower. It won't really matter how new the tile is.

We've had appraisals done on three homes (the most recent a couple months ago). None even looked at the inside. It was all done from the outside.

So obviously, things are done differently from place to place.

 

[DVC96]

Here in NVa, when you are having your home appraised for refinancing, the appraiser does come in your home and measure, count rooms and closets and look at the details - hardwood/tile/carpet, granite/formica, age of roof and windows, etc. However, when the county is doing an appraisal for tax purposes none of that matters. It is all done from the outside of your house and includes lot size. The tax man here does not care about the interior details.

 

[Swimalie]

Here in NVa, when you are having your home appraised for refinancing, the appraiser does come in your home and measure, count rooms and closets and look at the details - hardwood/tile/carpet, granite/formica, age of roof and windows, etc. However, when the county is doing an appraisal for tax purposes none of that matters. It is all done from the outside of your house and includes lot size. The tax man here does not care about the interior details.

I'm in NoVA too and this is true. We had ours appraised for refinancing about a year ago. He came in and had me tell him all the upgrades we did (appliances, light fixtures, took down a deck and added a patio, etc). He wrote it all down, measured every room and took pictures. But when it comes to comps, he only went by descriptions that were written by real estate agents. We did come out ahead (but we have still lost $140000 in value. Yikes).

 

[tinan]

Well as someone who just paid to have an appraisal done on our home and came away very disappointed, please take a look at Zillow before paying for an appraisal. Our appraisal only came in slightly higher than what zillow had listed on their website and it is free.

We have put a lot of updates in to our home and we thought there was no way it would come in that low. Keep in mind, in our particular away there are many people walking away from their homes which is what is really hurting us. Best of luck to you!

 

[arthur06]

We just put our house up for sale about 2 weeks ago. We don't need to sell it, but if we can get what we want for it, we will sell.

As far as appraisals go, according to my realtor, you do not have to let them in. She was telling us that people will/will not let them in depending on the condition of there home and what is more favorable to them.

We have redone all our electrical, bathrooms, kitchen, new carpet and flooring, new central air and heater, pretty much a total remodel of our house in the last 5/6 years. When she compared it to other houses, those did NOT help us out. I looked at all the comps and our house is higher priced then others, but the house stands out.

She also stated that you can request a 2nd look at what your appraiser gave for a value if you think it is too low. She said that there are some who are very willing to listen and others who are not willing to listen at all. Maybe call around to a local realtor and see if they know who is better to work with to get a favorable appraisal. Never hurts to try.

 

[MrsPete]

But I would think that going from a 1940's kitchen that was 10x10 to an open kitchen with stainless steel appliances, hardwood floors, granite countertops and custom cabinets would definitely increase the value of my home, no?

If you've done things that make the home more "sellable", things that raise the home's selling price, then yes, it will raise the value of your home.

 

[mistysue]

I'm happy for you that you live in an area it matters... I looked into getting my house refinanced because I have upgraded the paint and flooring in the entire house, removed a wall and did about $30,000 of work in the kitchen, replaced the roof, siding and ALL major appliances and it didn't count for anything. Seriously about $70,000 of work on a house appraising for $130,000.

 

[ccgirl]

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.

 

[Colleen27]

I'm happy for you that you live in an area it matters... I looked into getting my house refinanced because I have upgraded the paint and flooring in the entire house, removed a wall and did about $30,000 of work in the kitchen, replaced the roof, siding and ALL major appliances and it didn't count for anything. Seriously about $70,000 of work on a house appraising for $130,000.

That's about how ours went too... The appraiser didn't even ask to come inside. We had all new hardwood flooring, appliances, roof, and added a shower to what had been a half bath. None of that mattered; the appraiser just reported square footage, lot size, specs from the city (that were wrong - they still don't have that second bath in the description despite the fact that permits were filed for the work), and neighborhood comps. We just barely got the number we needed to drop our PMI - and we only needed the value to have increased by $3,000 over the 5 years we'd been there.

 

[TiggerTails57]

We got our PMI removed by paying down our principal balance......step #6 Dave Ramsey.

We now own 57% of our home

We decided to wait till our home is paid for before putting in expensive upgrades.

 

[Muushka]

Speaking of doing upgrades.

My husband started collecting some pretty expensive items. I was beginning to resent the $$ spent on them.
So I revolted! I said if you can spend $$ on that then I want my new kitchen!!!

Well, 1 year ago the work was almost completed and I must say, I don't care if what we did to this house raises its value or not. I love what we did! We updated all the counters and cabinets in the kitchen and added a 12 or so foot wall of cabinets and granite in the dining area (not dining room, that is separate). I have tons of storage and I don't resent my husband spending money!

PS we have not gone into debt for any of the items mentioned above. And my improvements were 3X the cost of his collection!
I love my husband And I am glad we didn't wait to do it. We will enjoy this for a very long time.

 

[Natalie's Mommy]

But I would think that going from a 1940's kitchen that was 10x10 to an open kitchen with stainless steel appliances, hardwood floors, granite countertops and custom cabinets would definitely increase the value of my home, no?

it depends on how much you spent and what you did. yes it adds some value, but you may not get 100% return on your investment

No, it doesn't work that way.

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

 

[budafam]

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

 

[Muushka]

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.