What is a PMI removal appraisal?

Private mortgage insurance, or PMI, is insurance that protects the lender if a borrower defaults on their mortgage. It is typically required when the borrower has a down payment of less than 20% of the purchase price of the home.

A PMI removal appraisal is an assessment of the value of a property that is used to determine whether the borrower can have their PMI removed. This is typically done once the borrower has built up enough equity in the property, which is typically when the loan-to-value (LTV) ratio falls below 78%. The LTV ratio is calculated by dividing the outstanding balance of the mortgage by the value of the property.

There are several reasons why a borrower may want to have their PMI removed:

1. To save money: PMI can add hundreds of dollars to a borrower's monthly mortgage payment, so removing it can significantly reduce the overall cost of homeownership.
2. To refinance: Some borrowers may want to refinance their mortgage to take advantage of lower interest rates or to change the terms of their loan. In order to do so, they may need to have their PMI removed first.
3. A PMI removal appraisal is typically conducted by a licensed appraiser who is familiar with the local real estate market and has the knowledge and skills to accurately assess the value of the property. The appraiser will consider factors such as the condition of the property, its location, and any unique features or amenities when determining its value.

In conclusion, a PMI removal appraisal is an assessment of the value of a property that is used to determine whether a borrower can have their PMI removed. It is typically required when the borrower has built up enough equity in the property and is looking to save money on their mortgage payment or refinance their loan. It is important to use a licensed, qualified appraiser to ensure that the appraisal is accurate and reliable.