An independent appraisal to support a request to drop private mortgage insurance. Read the section below before you order one, because your servicer may not accept an appraisal you arrange.
I turn away a fair number of these, and it is almost always for the same reason: the homeowner paid for an appraisal before finding out whether their servicer would use it. Your servicer sets the rules for how it verifies value, and for a large share of loans it orders the valuation itself rather than accepting one you bring. Fifteen minutes on the phone will tell you which situation you are in.
Ask five questions and write the answers down, along with the date and the name of the person you spoke with.
The federal Homeowners Protection Act governs private mortgage insurance on loans consummated on or after July 29, 1999, secured by a single-family dwelling that is the borrower's principal residence. It creates two paths, and neither of them is about your home appreciating.
Automatic termination happens when your principal balance is first scheduled to reach 78 percent of the original value under the loan's original amortization schedule, provided you are current. This is on the servicer to do. You do not request it, and under the statute the servicer may not require you to pay for a property valuation as a condition of automatic termination. There is also a final termination: if you have not reached 78 percent by the midpoint of your loan's amortization schedule, the insurance ends the month after that midpoint, again provided you are current. Extra principal payments accelerate the cancellation date but not the automatic termination date, which follows the original schedule.
Borrower-requested cancellation is available when the balance reaches 80 percent of the original value. Original value means the lesser of the contract sales price or the appraised value at the time the loan closed, and for a refinance it means the appraised value used for that refinance. Appreciation since then does not enter into it. The servicer must honor a request that meets the conditions: it is in writing, you are current, you have a good payment history, you certify that your equity is not subject to a subordinate lien, and you supply evidence of a type established in advance by the servicer that the property's value has not declined below its original value.
Ask who owns your loan, what your automatic termination date is, and whether an appraisal you arrange is even accepted. Many homeowners find they need nothing from me.
Notice what that last condition asks for. On the borrower-requested path, the value question is not whether your home is worth more than it was. It is whether it is worth at least what it was. That is a lower bar than most homeowners expect, and it is the most common legitimate use of my report in this context.
The path everyone is actually thinking of when they call, cancellation because the home appreciated, is not a Homeowners Protection Act right. It is a program the loan's owner offers. Fannie Mae, for example, allows a borrower-initiated termination based on the property's current value on a one-unit principal residence when the loan has been seasoned two to five years and the loan-to-value ratio is 75 percent or less, or more than five years with a ratio of 80 percent or less. It requires the borrower to be current, with no payment 30 or more days past due in the last 12 months and none 60 or more days past due in the last 24 months. Freddie Mac and portfolio lenders have their own comparable rules.
Here is the part that costs people money. Under that Fannie Mae program the servicer obtains the property valuation, based on an interior and exterior inspection, through Fannie Mae's own system. The homeowner does not go hire an appraiser and hand in the report. If your loan is owned by one of the agencies, an appraisal you commission independently may not be usable for that purpose at all, however well prepared it is. Ask before you spend.
There are real situations where it is, and I will be direct about which ones they are.
Automatic termination at 78 percent of original value is the servicer's obligation, and the statute bars charging you for a valuation as a condition of it.
FHA mortgage insurance premiums are government insurance, not private mortgage insurance, and the Homeowners Protection Act expressly does not cover mortgage insurance made available under the National Housing Act. The cancellation rules are entirely different.
For FHA loans originated on or after June 3, 2013, the annual premium generally ends after 11 years if the original down payment was 10 percent or more, and otherwise continues for the life of the loan. Those outcomes turn on the original loan-to-value ratio and elapsed time, not on what your home is worth now. A new appraisal does not change either input. The usual route out is refinancing into a conventional loan, and whether that makes financial sense depends on your rate, balance, closing costs, and how long you plan to stay. A loan officer, not an appraiser, should run those numbers for you. VA loans do not carry monthly mortgage insurance at all.
Find the mortgage insurance line on your statement. Multiply that monthly figure by the number of months until your scheduled automatic termination date, which your servicer can give you. That product is the absolute ceiling on what acting now can save you.
If automatic termination is nine months out and you are paying 94 dollars a month, the most that is on the table is roughly 850 dollars, and an appraisal plus whatever the servicer charges eats a large piece of it while you wait for a decision that may not go your way. If termination is seven years out and you are paying 210 dollars a month, the calculation looks very different. I would rather you do this math and decide not to hire me than hire me and find out afterward the numbers never worked.
FHA premiums are government insurance outside the Homeowners Protection Act, and they follow original loan-to-value and elapsed time. A new appraisal does not change that.
I cannot promise that your mortgage insurance will be removed. The decision belongs to your servicer under rules set by the loan's owner and the mortgage insurer, and my report is one input into it. Any appraiser or company that guarantees a cancellation outcome is making a promise they have no ability to keep.
I will also not tell you in advance what value I expect to reach, quote you a fee that depends on the value, or accept an assignment conditioned on hitting a number that produces a particular loan-to-value ratio. If you tell me you need 412,000 to get to 80 percent, I will decline the engagement. An appraisal steered to a target is not an appraisal, and if a servicer detects that it destroys the credibility of the report you paid for.
Nor do I contact your servicer, submit paperwork, or negotiate on your behalf. I deliver the report to you and you handle the request. Keep a copy of everything you send, with dates.
I appraise one-to-four unit residential property and residential land in Fort Worth, Tarrant County, and the surrounding North Texas market. No commercial property, no apartment buildings of five units or more, no subdivision analysis.
The fee is quoted in writing before I begin (standard single-family starts at $500), based on the property's size, complexity, and location, and it does not change with the value I conclude or with what your servicer decides. Typical turnaround from inspection to delivered report is 5 to 7 business days. Before you schedule, ask your servicer what report format it requires, because some specify a particular form or require the appraisal to name them as an intended user, and that is far easier to set up at the start than to fix afterward. Have documentation of any improvements ready, with dates and costs, along with permits if you pulled them.
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Often not. Automatic termination at 78 percent of original value requires no request and no valuation, and the servicer may not charge you for one as a condition of it. Borrower-requested cancellation at 80 percent of original value requires evidence that value has not declined below the original figure, and the servicer decides in advance what evidence it accepts. Cancellation based on current appreciated value is a separate program with its own valuation rules, so ask your servicer before ordering anything.
At 78 percent of the original value, on the date your principal balance is first scheduled to reach that figure under the original amortization schedule, provided you are current on payments. There is also a final termination at the midpoint of the loan's amortization schedule if you have not hit 78 percent by then. Extra principal payments move up the date you can request cancellation, but they do not move up the automatic termination date, which follows the original schedule.
That depends entirely on your servicer and on who owns the loan, and it is the first thing to confirm. Under Fannie Mae's program for termination based on current value, the servicer obtains the valuation through Fannie Mae's system rather than accepting one the borrower commissions. Some portfolio and non-agency lenders do accept a borrower-provided appraisal. Get the answer in writing before you hire anyone, including me.
Start by writing to your servicer. Depending on your loan there are three routes: automatic termination at 78 percent of original value, borrower-requested cancellation at 80 percent of original value with a good payment history and no subordinate lien, or a current-value program offered by the loan's owner that typically requires seasoning of at least two years and a lower loan-to-value ratio. Paying principal down to a threshold is often the most direct route and requires no appraisal at all.
Under Fannie Mae's requirements for a one-unit principal residence, a loan seasoned two to five years needs a loan-to-value ratio of 75 percent or less based on current value, and a loan seasoned more than five years needs 80 percent or less. You also must be current with no payment 30 or more days past due in the last 12 months and none 60 or more days past due in the last 24 months. Other loan owners and portfolio lenders set their own seasoning rules, so verify yours.
No. FHA premiums are government insurance and fall outside the Homeowners Protection Act. For loans originated on or after June 3, 2013, the annual premium generally ends after 11 years if the original down payment was 10 percent or more, and otherwise runs for the life of the loan. Both outcomes depend on the original loan-to-value ratio and elapsed time, not current value, so a new appraisal changes nothing. Refinancing into a conventional loan is the usual alternative.
My fee is quoted in writing before I begin (standard single-family starts at $500), depending on the property's size, complexity, and location. It does not vary with the value I conclude or with what your servicer decides. If your servicer orders the valuation itself, you will typically be quoted a fee by the servicer instead, and my report would not be part of that process.
No. I do not give value previews, and you should be wary of anyone who does, because an appraiser who tells you the answer before doing the work has committed to a conclusion before analyzing anything. If your loan-to-value ratio is genuinely borderline, spend the phone call with your servicer instead and find out what threshold you would need to clear, then decide whether an appraisal is a reasonable bet.
Written fee quote, typically within one business hour. If your servicer's answers mean an appraisal will not help, I will tell you on the call and you will have spent nothing.
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