Can lenders charge for an additional appraisal when trying to get rid of PMI?

For non-FHA loans, mortgage insurance (PMI) can be cancelled when your mortgage balance reaches 80% of the original value used to make the loan. To do so, the borrower must make the request to the loan servicer. Assuming you are not relying on any property appreciation and are just relying on the current principal balance being at 80% or less of the original value used to make the loan, then no appraisal should be required. However, the Act does specify that cancellation is based on the point in time where the regular amortization brings the balance to 80% of the original value used to make the loan, irrespective of the actual balance of the mortgage. What this means is that if you meet the equity requirement because of an acceleration of payments (or lump sum payment to principal), the lender can require you to provide an appraisal to establish that the current value of the home vs. the loan balance provides the required 20% equity. You can find a great information piece that documents the extent of the Homeowners Protection Act of 1998 at http://www.mgic.com/pdfs/71-41599hopa.pdf. ~ Bert Carpenter, The LoansA2z team of NOVA Home Loans ~ NMLS 40586 ~ Licensed in California and Arizona ~ www.LoansA2z.com 888-889-9950

As most others noted, check your original loan documents, but assuming this is a Fannie or Freddie backed loan, the burden of today's market value will be on you. If your loan is FHA Insured, the documents you signed at closing should disclosure the cancellation policy for the mortgage insurance. From your notes, it seems you recently purchased this property, so depending on your market, the valuation may not be high enough yet. Also, you can consider options if you think your rate could improve where you could considering refinancing into a different loan program and calculate your new loan to be at or less than 80% loan to value, thus eliminating MI all together. I'd be happy as anyone here to talk to you directly so the entire situation can be discussed in greater detail. A phone conversation will usually produce more results than our replies to the limited information supplied!

The lender can and will charge for the appraisal to determine your value.. Since your petitioning them to have it removed, it's up to you to prove you have sufficient equity, and you get to pay any costs associated with it.. I'm a Broker here in Scottsdale AZ and I only lend in Arizona. If you or someone you know is looking for financing options, feel free to contact me or pass along my information. 480-287-5714 WilliamAcres.com

Unfortunately it's up to you to prove your home is at the 78% LTV so yes they can charge you.

Yes, the lender can charge for the additional appraisal because they need to make sure that you are at least at or below the 78% ltv.

You really need to go back to your closing paperwork, find your PMI document(s) and see what the guidelines are. Typically, a mortgage insurance policy has a minimum amount of payments, regardless of how much your home value has increased or your loan amount has decreased. That minimum number of payments is typically 60. If you're able to cut off 40 or 50 payments by purchasing a new appraisal, the amount of your savings is so much higher than the cost of the appraisal. If you're fortunate enough to be able to shorten your mortgage insurance payment period, I would jump at paying $500 for an appraisal. But again, be sure you know the rules as lined out in your closing package. Be sure you can actually do what they're telling you.

Yes I agree with David. Check your old paperwork. A lot of loans are 78% of the loan balance, not the loan to value. In this case you would not need an appraisal or need to prove anything. Simply they are required by law to drop the PMI after 78% of the loan balance. But again it should be spelled out in your old paperwork.

To expand on Davids point , if you haven't paid the MI for the rquired 5 years on an FHA loan or typically a year on a conventional loan it won't drop. If you have an FHA loan then you may want to look into refinancing into a conventional loan. But be sure and check with your lender and review your loan closing documents before ordering an appraisal

Yes they can.

LRockstein,How much did you put down? I may be able to use the old appraisal and refinance you based on that at one of my investors. Feel free to contact me to discuss the details. Jacob Mobile 720.210.7898 Call or text. Apply online with me at https://secure.web-loans.com/security-logon.aspx?timeout=1PS. 3 months is usually the limit on appraisals but I've been able to do a recert and get that extended if caught before the 91st day. JHJacob Cole Haddan - Mortgage Broker/Banker MAC5 Mortgage Inc. |www.mac5mortgage.com | 225 Union Blvd. Ste. 350 | Lakewood Co. 80228 | Direct/Cell: 720.210.7898|Home/Magic Jack 305-848-8255 | Fax: 720.407.6343 |Toll Free: 866.606.MAC5| Fax 866.426.2203 Regulated by the Division of Real Estate CLICK HERE for my online application NMLS#232061 Colorado LMB# 100007576

LRockstein,How much did you put down? I may be able to use the old appraisal and refinance you based on that at one of my investors. Feel free to contact me to discuss the details. ***********************************Jacob Mobile 720.210.7898 Call or text. *********************************************Apply online with me at https://secure.web-loans.com/security-logon.aspx?timeout=1************************************************PS. 3 months is usually the limit on appraisals but I've been able to do a recert and get that extended if caught before the 91st day. JH*************************************************Jacob Cole Haddan - Mortgage Broker/Banker MAC5 Mortgage Inc. |www.mac5mortgage.com | 225 Union Blvd. Ste. 350 | Lakewood Co. 80228 | Direct/Cell: 720.210.7898|Home/Magic Jack 305-848-8255 | Fax: 720.407.6343 |Toll Free: 866.606.MAC5| Fax 866.426.2203 Regulated by the Division of Real Estate CLICK HERE for my online application NMLS#232061 Colorado LMB# 100007576

Most leanders will require an appraisal to prove the value.

Generally speaking, there are two options to remove PMI. One is the automatic removal by the lender once the Loan-to-Value goes BELOW 78% of the original appraisal. Regardless of when this is, on Conforming Fannie Mae and Freddie Mac loans, you must pay PMI for at least two-years. On an FHA loan, you must pay at least 5-years. Once you have gone beyond the year limit, it is up to you to prove to the lender the value is below 80%. This is done by YOU paying for an appraisal from an acceptable to the lender appraisal company.