Is this legal?? - Posted by scott

Posted by RC on March 08, 2002 at 06:57:53:

The new appraisal doesn’t mean anything if the lender policy says otherwise. The example I gave was one that requires 65% LTV at time of a new appraisal. Waterfield Mortgage Co is another - they will NOT drop PMI unless you refinance - they apply it for the life of the loan.

Is this legal?? - Posted by scott

Posted by scott on March 05, 2002 at 18:23:46:

Please advise if the following scenario is legal and doable:
1)I purchase a home for $80,000 with a mortgage from bank A
2)I get the home appraised and find out the market value is $100,000
3)I got to bank B and refinance by taking out a second mortgage for $80,000. Now since the house is valued at $100,000 and I take a loan for $80,000(to pay off bank A) will I be exempt from PMI?
By doing this I reduce my net payments while maintaining the same mortgage rates. Please advise if this makes sense or if I am grossly misunderstanding the game! Thanks

Re: Is this legal?? - Posted by RC

Posted by RC on March 05, 2002 at 22:22:00:

First of all, when you get the mortgage from bank A, they will do an appraisal and know the value of the home is 100k - if they require PMI on an 80% LTV it is because you are considered a credit risk.
If, for some reason, the appraised value were to suddenly jump up after purchase to make the house “become” worth 100k then it would be questionable. Again it will depend on your credit worthiness. Another factor will be “seasoning”. Many lenders require a twelve month payment history before they will refi a property. Some institutions will remove the PMI with a new appraisal report that meets their criteria. National City Mortgage for example requires that the LTV reach 65% before they will remove PMI. So in summary your deal is not very doable.
Don’t forget, that even if it is doable thereare still the costs of closing a new loan to increase your out of pocket expenses.

Re: Is this legal?? - Posted by Chuck

Posted by Chuck on March 07, 2002 at 23:30:32:

No need to go through all that. Get an appraisal and show you have 20% equity and I believe they have to drop the PMI.
Refi’ing again will be more costly.