PMI removal based on property appreciation?

January 18, 2023 12:07 PM

My house has appreciated significantly since I bought it 2.5 years ago. Has anyone had success removing private mortgage insurance using a re-appraisal from the mortgage company?

I have about a $20K cushion over the price I need (based on very similar, recent comps), but not sure it's worth pursuing. I'm not refinancing. I would save 10x cost of appraisal.

Another option is to wait six months and I'll only need a loan-to-value rate of 80% vs. 75% to drop PMI, effectively doubling my cushion to $40K plus whatever pittance of my principal I pay down in that time.

PMI drops in 2.5 years if I do nothing.

The last questions about this are pretty old and the housing market has been wild. It's slowed down a bit in my area vs. a year ago, but homes are still selling briskly.

posted by momus_window to Home & Garden (7 answers total)

Response by poster: Oops, I misremembered the terms, waiting won't change the LTV needed.
posted by momus_window at 12:11 PM on January 18, 2023

I got mine dropped early (1.5 years in) after calling the bank to request it be dropped. They didn’t do a reappraisal, just sent me a letter a month later stating they reviewed and agreed to drop it since I paid down more than 25% since taking out the loan. Worth a call regardless imo, worst case scenario they make you pay for the reappraisal. Best case scenario, they review and drop it without a reappraisal.
posted by ttyn at 12:21 PM on January 18, 2023 [1 favorite]

Best answer: Yes, I have done this. The reappraisal was done and the PMI was removed. No problems.
posted by They sucked his brains out! at 12:33 PM on January 18, 2023 [1 favorite]

Best answer: Yeah. It was pretty straightforward. I think I had to pay for the reappraisal in my case since it was based on appreciation, and the reappraisal required a lady to walk through my house and take pictures to create a market analysis report. But it was ultimately worth it since it removed our PMI a few years early.
posted by po822000 at 1:22 PM on January 18, 2023 [2 favorites]

My experience was exactly like po822000 describes. The only thing we did differently was refinance for a slightly lower rate (yeah, this was a couple years ago) and roll in another loan we held at another bank (at a higher interest rate).
posted by pepper bird at 7:23 PM on January 18, 2023

Response by poster: Thanks, y’all! Sent in my check for the appraisal, fingers crossed!
posted by momus_window at 7:53 AM on January 19, 2023

Good luck, and keep receipts: You might be able to claim the appraisal costs at tax time.
posted by They sucked his brains out! at 11:26 AM on January 24, 2023