PMI And Home Appraisal Value
(New York, NY USA)
Ask Kate About PMI And Home Appraisal Value: Hello Kate, Do I still need to pay PMI? I'm buying a house for $270,000 with 5 percent down. But the house appraised for $325,000.
Kazim continues... We had a lender required appraisal on this house. Our closing is scheduled for next week. Thanks, Kazim
Kate Answers: PMI And Home Appraisal Value
***zz-portrait-left.shtml*** Dear Kazim,
You are wise to ask about purchase price versus home appraisal value as it relates to private mortgage insurance.
For home purchases, the need for private mortgage insurance (PMI) is calculated on the loan to value ratio (LTV). The LTV is based on whichever is less, the sales price or appraised value of the house.
PMI And Home Appraisal Value - Down Payment
For example, since you are buying a house that costs $270,000, a 5 percent downpayment would be $13,500, a 95 percent LTV. Any less than a 20 percent downpayment, 80 percent LTV, and you will be required to purchase PMI.
Please note these calculations are based on the purchase price, not appraised value. The appraised value is not taken into consideration since the purchase price is lower.
What Is PMI? How To Cancel PMI?
Below, you'll find my guide to private mortgage insurance What Is PMI
addressing private mortgage insurance for both home buying and refinancing.
For example, one of the articles explains the three methods for getting rid of PMI - How Do I Cancel PMI
. You'll also like my more in-depth information found at How Lenders Calculate PMI
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