First step towards homeowners, again!

[markseven]

Steps up to the mic.

Actually, it's 20% equity, not principle. So it might be worth it to hire another appraiser to see if the value of the property is higher than appraised.

At the very least, ask the lender to justify the difference between the two numbers. It's in the interest of the bank to get you to pay PMI.

Fight for a better appraised value. Worse case scenario is you get an independent appraisal and give it to the lender showing you have equity already.

To beat PMI, you will need an appraised value of $231,250. But having them adjust the LTV on their records with a good appraisal changes when their PMI falls off.

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Okay, so I have a reason to PM you today

I will bow out now

[marshallnoise]

You need to make a down payment of 20% of the selling price in order to avoid PMI.

If you have PMI, it drops off once you have paid down 20% of the principle.

Steps up to the mic.

Actually, it's 20% equity, not principle. So it might be worth it to hire another appraiser to see if the value of the property is higher than appraised.

At the very least, ask the lender to justify the difference between the two numbers. It's in the interest of the bank to get you to pay PMI.

Fight for a better appraised value. Worse case scenario is you get an independent appraisal and give it to the lender showing you have equity already.

To beat PMI, you will need an appraised value of $231,250. But having them adjust the LTV on their records with a good appraisal changes when their PMI falls off.

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[markseven]

You need to make a down payment of 20% of the selling price in order to avoid PMI.

If you have PMI, it drops off once you have paid down 20% of the principle.

[Exodus_2pt0]

I appreciate all the info!

So what does the mortgage insurance 20% value base off, the appraisal? Or Loan origin amount?

I was hoping that the appraisal would reflect the original number given to the owner, so we could get rid of mortgage insurance faster.

But, if the 20% rule is from the original loan amount, then I guess it doesn't matter anyway.

[marshallnoise]

Thanks man, I appreciate your willingness to share your experience / knowledge. I will ping you as needed :)

Right on!

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[markseven]

Thanks man, I appreciate your willingness to share your experience / knowledge. I will ping you as needed :)

[marshallnoise]

Good point (bold text above), and it sounds like you know your stuff! I may need to PM you in the future ;D

My wife is a residential and commercial appraiser. My grandmother, dad and mom are all brokers. I also work in the HOA world. I am kind of close to it. Lol. Any time friend. If I don't know something, I will be honest about it.

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[markseven]

The AVM tools pull comps and spit out a number. Appraisers do not use them; only agents and brokers or attorneys back east.

Appraisers pick 4 to 5 properties that recently sold, typically in the same financing situation too since that influences price, then brackets the subject with something larger, smaller, superior and inferior and use adjustments to come up with a value. AVM tools do the same thing, but they don't have the ability to make significant adjustments.

I think the special sale condition influenced the appraisers report in this situation. In this case, the broker value of 200-210 is probably more accurate. But since a full price sale is way under the actual value, it wouldn't matter how accurate the appraisal is.

A friend of mine got a reverse mortgage on their house. It was paid off, free and clear. The rules at the time were that you could pull out 25% equity out of the house. My friend wanted only 15%. So the appraiser appraised the house at $2.2 million to meet the loan requirement. The market said the home was actually worth $2.8 to $3.0 million.

While some appraisal rules have changed, Banks still make demands on the appraisers. And they comply if they want business. The laws only ensure that Banks don't use the same appraiser continually and establishes a rotation. But the bank still gets to pick who is in their rotation.

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Good point (bold text above), and it sounds like you know your stuff! I may need to PM you in the future ;D

[marshallnoise]

AFAIK, realtors and lenders use an AVM tool to set or gauge value initially (based on similar homes that have recently sold in the same geographic area). The appraiser also uses comps as well as first-hand, onsite visual inspection to adjust the value.

I think after 2005 laws were put into place to bar realtors and lenders from influencing appraisals.

I think your situation was is a coincidence.

The AVM tools pull comps and spit out a number. Appraisers do not use them; only agents and brokers or attorneys back east.

Appraisers pick 4 to 5 properties that recently sold, typically in the same financing situation too since that influences price, then brackets the subject with something larger, smaller, superior and inferior and use adjustments to come up with a value. AVM tools do the same thing, but they don't have the ability to make significant adjustments.

I think the special sale condition influenced the appraisers report in this situation. In this case, the broker value of 200-210 is probably more accurate. But since a full price sale is way under the actual value, it wouldn't matter how accurate the appraisal is.

A friend of mine got a reverse mortgage on their house. It was paid off, free and clear. The rules at the time were that you could pull out 25% equity out of the house. My friend wanted only 15%. So the appraiser appraised the house at $2.2 million to meet the loan requirement. The market said the home was actually worth $2.8 to $3.0 million.

While some appraisal rules have changed, Banks still make demands on the appraisers. And they comply if they want business. The laws only ensure that Banks don't use the same appraiser continually and establishes a rotation. But the bank still gets to pick who is in their rotation.

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[markseven]

AFAIK, realtors and lenders use an AVM tool to set or gauge value initially (based on similar homes that have recently sold in the same geographic area). The appraiser also uses comps as well as first-hand, onsite visual inspection to adjust the value.

I think after 2005 laws were put into place to bar realtors and lenders from influencing appraisals.

I think your situation was is a coincidence.

[marshallnoise]

It's typical that in oddball transactions like this that the appraiser just did next to no work and spot checked the comps and if the selling price was significantly under that, simply report the selling price.

It's a shitty tactic, but it does happen. Banks just want to make sure it "pencils."

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[Exodus_2pt0]

So, is it common practice for the appraisal to come back at exactly your purchase price?

When the owner had inquired with a agent about sale, he was told to list it at 210 and expect 200.

We agreed on 185 since we aren't using a real estate agent.

Guess what the appraisal comes back at, 185.

Seems odd, I'm not complaining because it means that all is good to go. But, I have to wonder what would have happened if the appraisal company was not given he agreed sale price until afterward.

[bikerbill2021]

thats cool man, congrats! I've been trying to buy a home out here, but going to wait for now and pay off somethings so I can get a place close to where I live now, rather then way out in the outskirts of the city. I'm jealous of that garage space you will have!

[Exodus_2pt0]

Quick update. All hoops have been jumped through, waiting on the appraisal now and I should receive my final approval. Hell, I've even got a homeowner's insurance policy in place to take effect on our closing date.

S4 goes into the garage tomorrow. It's nice working with the people I'm buying from, they made room for it since I went and broke it. No use paying insurance on a car that will be down for the winter.

If all goes well, and at this point I'm confident it will, I get the keys on August 16!

[Exodus_2pt0]

Well my loan should be going to the underwriter today! They will be running my credit again next week, so that it is within the 45 day mark. Hoping to get a better rate than I have now. As it is my payment is a little higher than I'd like, but nothing I can't handle. Just have to start making my coffee at home more often.

When they ran my credit I think I was around 660. Last I checked it has jumped to 720 so I look forward to a decently better rate.