Personal Finance & Money Asked on May 3, 2021
I have studied questions around Mortgage Insurance removal and various experiences (mostly painful) with lenders in this process.
I had budgeted and readied myself to make a principal payment to bring our stake in the house to 20% but the website said to call their helpline. So I did. They said there may be other ways to remove the MI and so I learned that property appraisal can be one way to do so.
On a related but separate note, I was told on the phone that because I have had the mortgage for less than 5 years, I would have to bring my stake in the house to 25% (not 20%). Not sure I recall this in the terms/agreement. Is this even possible?
I live in the San Francisco Bay Area and I’d be shocked if the appraisal comes lower than when we bought (8 months ago. We also made home improvements). But the question I have is, if I go the route of appraisal, would that increase my property taxes?
Also, for academic purposes, if the appraisal comes lower, would the property tax reduce?
Private appraisals are not used to calculate taxes. Tax assessments are performed by the government (city/county/state) collecting those taxes. You can use an appraisal to appeal a tax assessment, but the appraiser you hire won't send the information off to them for use. In fact, if you hire the appraiser independently, they shouldn't send it to anyone but you. Tax assessors typically use different forms and methodologies to evaluate value than an appraiser will.
The downside to having an appraisal done is the cost, which can be several hundred dollars. I would recommend contacting a realtor (maybe the one that assisted with your home purchase originally, if you care to speak to them) and ask for their opinion on market value. That should give you a solid idea about where you might expect an appraisal to come in. Weigh the cost of the appraisal against what you might save in PMI. For instance, if the appraisal costs $600, but you only have $550 worth of PMI to pay before the PMI would "organically" fall away (loan to value ratio), then it wouldn't be worth doing. If you've still got years left of PMI to pay, then it might certainly be worth pursuing.
Answered by BobbyScon on May 3, 2021
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