How do I avoid PMI?
If I purchase a house worth $135k but the appraised value is at $175k what is the basis for the 20% down so that I can avoid paying for PMI? I’ve saved up enough for a down payment with PMI avoidance in mind. by symbolic138 from Arlington, Indiana. Aug 11th 2022
Dave Skow (daveskow)
#1 ranked lender in Washington - 455 contributions
the basis the lender will use is the 135K price ...lenders will use the lesser of the acq price or the appraised value ...so in this case to avoid the mtg ins - your down payment needs to be 27K
Joe Metzler (JoeMetzler)
#17 ranked lender in Minnesota - 4,843 contributions
Unfortunately, the way mortgage loans work, is the lender will base everything, including PMI, off the purchase price. So you'll need to put 20% down from the $135k to avoid it today. With that said, I'd just go ahead and close on the house... After making at least 6 payments, contact the lender to ask about dropping PMI. They will make you get an appraisal, and if it comes back that high, there is a very good (but not guaranteed) chance they will drop the PMI at that time. I provide home mortgage loans in MN, WI, IA, ND, and SD. Find me at JoeMetzler.com/pre-qual - Cambria Mortgage, NMLS 274132
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