Called Wells Fargo and was given these options to remove my PMI.

Option 1 - Appraisal with proof of improvements at 80% LTV
Option 2 - Appraisal or Brokers Price Opinion at 75% LTV (proof of improvements unnecessary)
Option 2a - If Appraisal or Brokers Price Opinion does not meet 75% LTV, but shows no decline in value, option to pay down principal amount at 80% LTV rather than 78% (option 3)
Option 3 - Lump sum principal payment at 78% LTV

Appraisal cost is $360 and Brokers Price Opinion $145.

I have not made any improvements, therefor I cant go with Option 1. I am confident a brokers opinion would meet the 75% LTV, but if not, I am ready to pay the lump sum of 80%.

Thoughts?

What is Brokers price opinion? a realtor?

Wells Fargo will require you to order an appraisal from RELS....which they own. There is no incentive for them to correctly appraise/value your home.

rj did not know that about wells. and I agree that is could be a bad solution.

just got rid of PMI with wf and it was pretty easy, but our values were pretty easy to hit

I was in the same boat as PB. Got rid of PMI last year. I paid the appraisal fee through RELS and the PMI was dropped.

So, say I bought my house 3 years ago for 150,000 and now everything in my neighborhood is listed and selling around 200,000, if I get a new appraisal from them, and my balance is less that 80% of the appriasal I can get my PMI dropped?

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So, say I bought my house 3 years ago for 150,000 and now everything in my neighborhood is listed and selling around 200,000, if I get a new appraisal from them, and my balance is less that 80% of the appriasal I can get my PMI dropped?

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What you paid is irrelevant. You need to know what you owe. And yes, your balance will need to be whatever % they require to drop your PMI.

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So, say I bought my house 3 years ago for 150,000 and now everything in my neighborhood is listed and selling around 200,000, if I get a new appraisal from them, and my balance is less that 80% of the appriasal I can get my PMI dropped?

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What you paid is irrelevant. You need to know what you owe. And yes, your balance will need to be whatever % they require to drop your PMI.

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Right, presumably, if I paid 150,000 3 years ago, I'd owe less than that now.

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So, say I bought my house 3 years ago for 150,000 and now everything in my neighborhood is listed and selling around 200,000, if I get a new appraisal from them, and my balance is less that 80% of the appriasal I can get my PMI dropped?

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What you paid is irrelevant. You need to know what you owe. And yes, your balance will need to be whatever % they require to drop your PMI.

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Right, presumably, if I paid 150,000 3 years ago, I'd owe less than that now.

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sure, any progress you have made on the principal plus anything you put down in the first place

PMI is the suck. I worked two jobs when we bought our first house and paid that crap down in a few months. It's highway robbery.

you bought for 150,000
you owe 130,000
apprasial of your house 200,000
130,000/200,000 = 65%
No more PMI!!!

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you bought for 150,000
you owe 130,000
apprasial of your house 200,000
130,000/200,000 = 65%
No more PMI!!!

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Yep.

I would say that people need to realize that, even in this current market there are houses that don't make appraisal when they go under contract, so I'd do some research before just assuming your house will appraise for what some neighbor is trying to sell theirs for. If it's obvious, go for it, but it would suck to pay for an appraisal and come up short if you're borderline.

Call your Realtor that sold you the house and ask them to do a market analysis of recent comps. These will probably be the same ones the appraiser uses.

I think that gives appraisers too much credit.

jj you have a better idea?

Got rid of my pmi this month. Basically makes up for the increase in taxes for the year.

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jj you have a better idea?

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Not at all. Just have 0 confidence in appraisers.

OK. But look at this way, the Realtor does the comp work and the appraiser poops it up, you already have the data to send to him for additional review.

I wish I could get rid of mine. I did an FHA so I have to pay 5 years of it minimum unless I refinance. Mine is based on loan to original FHA appraisal.

03 you are better off then FHA customers now. They cannot get rid of at all. FHA has definitely raised there costs over the last 5 years.

I'm trying to decide if I am going to go with 10 down & pay PMI or do a 2nd lien...

Advantage of 2nd lien is not having to escrow, interest from both mortgages deductible, & once I pay the 2nd lien off mortgage payment would go down by a decent bit. Rate on first lien is slightly higher tho & closing costs are a little higher but no pre pays so actual cash needed at closing is actually lower. If we go 2nd lien route we would plan to pay it off in 5 yrs or less.

What other negatives am I missing? Or why should I go the PMI route vs 2nd lien?

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I'm trying to decide if I am going to go with 10 down & pay PMI or do a 2nd lien...

Advantage of 2nd lien is not having to escrow, interest from both mortgages deductible, & once I pay the 2nd lien off mortgage payment would go down by a decent bit. Rate on first lien is slightly higher tho & closing costs are a little higher but no pre pays so actual cash needed at closing is actually lower. If we go 2nd lien route we would plan to pay it off in 5 yrs or less.

What other negatives am I missing? Or why should I go the PMI route vs 2nd lien?

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So, piggyback loans are back after they played a big part in the real estate crash 8 years ago? Hmm...

i had an 80/10/10 piggy back on my first house.

I think as long as your debt to income ratio is solid and your credit scores are 750 + then you are good to go.

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I'm trying to decide if I am going to go with 10 down & pay PMI or do a 2nd lien...

Advantage of 2nd lien is not having to escrow, interest from both mortgages deductible, & once I pay the 2nd lien off mortgage payment would go down by a decent bit. Rate on first lien is slightly higher tho & closing costs are a little higher but no pre pays so actual cash needed at closing is actually lower. If we go 2nd lien route we would plan to pay it off in 5 yrs or less.

What other negatives am I missing? Or why should I go the PMI route vs 2nd lien?

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80/10/10 if you can qualify and just pay extra on the 2nd lien to pay it off sooner.

if you can avoid PMI do it. Even if its an 80/15/5

That is what I am leaning towards. Why don't more people go this route? Is it harder to be approved or was in not available for a while until recently?

i did this back in 2012 so its been available for a while

i think it all depends on each individuals financial situation.

if you have a crappy credit score
limited assets
to high of a debt to income ratio
etc etc

if you are in Houston and need a mortgage banker let me know and i can get you in touch with my lender

even if you are not in Houston they can still help you, as long as you are in Texas.

also i think alot of people go the FHA route because they cant afford an 80/10/10 as far as downpayment and cant qualify using an 80/15/5

so they go FHA and throw down 3-5%

other than that i don't know why you would go FHA if you can qualify for a conventional

The 80/10/10 route does require a little more of a substantiated client. Not crazy hard but second liens have very little bite, so there is inherent risk. This is my preferred method unless we are just barley missing 20 % down.

I paid the appraisal fee earlier this year to get rid of PMI. My house rose about 50 grand so I easily hit the 75% LTV. It's worth doing.

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So, piggyback loans are back after they played a big part in the real estate crash 8 years ago? Hmm...

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This is completely false. Seconds had nothing to do with the financial crash. Most of the blame goes to subprime loans and their creators, wall street investment banks, and the collusion with the risk ratings companies. And they never left the market just raised their rates while risk of the economy was higher.

As for seconds vs PMI it is a case by case decision. PMI is tax deductible up to 100K combined home income. So if you make more then 120K (tax deductiblity declines rapidly to nothing at that amount) you definitely want to do a split loan if you can. Seconds do come at a cost. Fannie/Freddie charge .75% to 1.0% depending on credit score. That is usually rolled into the interest rate and not paid at the closing table.

So if market is 4.0 you get a first lien at 4.25 and your second lien is around 5.25% for 15 year term. That extra quarter on the first lien stays a cost for the life of the loan.

There are times when PMI is an acceptable choice. With 10% down you only need to gain 10% equity through paying down the loan and value increases. Since values in TX have rapidly risen and probably continue for a few more years while supply and demand are not equal, you could get out of PMI in just a few years. Or if you are expecting a windfall shortly, work bonus, gift, etc that would factor in as well.

Finally PMI is now indexed on your credit score and these companies are much more competitive with their rates for high credit scores. Best thing is take all the factors into account and make the right decision for your particular scenario. That is what I get paid to do.

good info Steve

That is true Steve! Hopefully I will get to keep deducting it and I have a low interest rate so it could be a worse situation for sure.

I started with FHA on my current house, because I bought it before selling my prior house and debt to income wouldnt work with conventional. Eventually sold old house and refinanced new house a year later to get rid of FHA, PMI, and escrow. Worked out nicely.