Posted on: 30th Dec, 2008 07:13 am
Hello: I am in the process of refinancing my home. The conventional appraisal came in at $312,000, however the FHA appraisal came in at $325,000. Which amount is used to determine the maximum amount to borrow without being charged PMI? We are looking into a 15 year conventional fixed mortgage and FHA 15 year fixed, and want to borrow the maximum allowable before PMI kicks in.
i'm a bit confused by this. why were 2 appraisals done? are you working with 2 different lenders?
now to get to the bottom of the mortgage insurance question: with conventional loans, any time you exceed 80% of the value of the home with your loan amount (312000 x 80% = $249,600), you're going to be faced with a requirement for mortgage insurance. with fha loans, since the guarantee to the lender is coming from the federal government, the ltv has no bearing - you will be paying a mortgage insurance premium (MIP) no matter what.
your credit score is going to go a long way in determining your interest rate and fees on a conventional loan; but much less so on an fha loan.
now to get to the bottom of the mortgage insurance question: with conventional loans, any time you exceed 80% of the value of the home with your loan amount (312000 x 80% = $249,600), you're going to be faced with a requirement for mortgage insurance. with fha loans, since the guarantee to the lender is coming from the federal government, the ltv has no bearing - you will be paying a mortgage insurance premium (MIP) no matter what.
your credit score is going to go a long way in determining your interest rate and fees on a conventional loan; but much less so on an fha loan.
The reason 2 appraisals were done is because we originally wanted to go for a conventional 15 year fixed however the loan officer advised to get a higher amount cash out to go for the FHA 15 year. Since we do not necessarily need to get a larger amount cash out to pay debts (since we could realistically pay them off over the next year) we are rethinking going FHA. Would a conventional loan take into consideration the FHA appraised amount? We are currently getting a copy of both reports.
Since the FHA loan includes MIP (approx 4300.00) wouldn't it be better to just go conventional and buy down points, because that is tax deductible? The FHA rate and conventional interest rate were the same, however we are not locked in yet. Our credit score ranges (me & coborrower) 701 - 788. Fico score between 669 - 800.
your fha appraisal would need to become a conventional appraisal. whether or not the higher amount would be used as value is impossible to say, as it's up to the underwriter to make that judgment.
are you dealing with the same lender in both cases? it seems rather peculiar to me that 2 completely different appraisals were ordered; they should have used an appraiser (my opinion) who could have done both. of course, in that case, the numbers would have been the same.
and yes, i think your reasoning about going with the conventional makes sense, inasmuch as you're trying to avoid mortgage insurance.
are you dealing with the same lender in both cases? it seems rather peculiar to me that 2 completely different appraisals were ordered; they should have used an appraiser (my opinion) who could have done both. of course, in that case, the numbers would have been the same.
and yes, i think your reasoning about going with the conventional makes sense, inasmuch as you're trying to avoid mortgage insurance.
did the same appraiser by any chance do the two different inspections? the inspections are totally different, but i can see under some certain circumstances ordering both. i have come very close to it myself. but they are two separate inspections, each with their own set of criteria for the inspection and the way comparable sales are to be utilized in the final determination of market value. you can have the same appraiser do both appraisals (provided the appraiser is also fha approved) and have 2 different values on each type of appraisal.
first, in order to get an fha appraisal, an fha case number would have been issued. your property has had an fha case number issued and for an fha loan, 325k must be used as the value for the next 6 months. after 6 months, if you don't refinance fha, both the case number and the appraisal expire. even if you change lenders, the fha case number and appraisal are tied to that home for 6 months.
as for the conventional appraisal, you are not stuck with it, like you are with the fha. you can order appraisal after appraisal, as long as the lender will tolerate. we are seeing a wide range in value lately and dates are everything. if your market is still considered "declining" you are risking the value going down with each order.
the final wild card is guidelines are changing non-stop. if this is something you are committed to doing, don't mess around, get it done.
first, in order to get an fha appraisal, an fha case number would have been issued. your property has had an fha case number issued and for an fha loan, 325k must be used as the value for the next 6 months. after 6 months, if you don't refinance fha, both the case number and the appraisal expire. even if you change lenders, the fha case number and appraisal are tied to that home for 6 months.
as for the conventional appraisal, you are not stuck with it, like you are with the fha. you can order appraisal after appraisal, as long as the lender will tolerate. we are seeing a wide range in value lately and dates are everything. if your market is still considered "declining" you are risking the value going down with each order.
the final wild card is guidelines are changing non-stop. if this is something you are committed to doing, don't mess around, get it done.
bottom line is the best thing you said in your "passing by," LOPB.
i don't know your market but our appraisers provide us with essentially the same report whether fha or conventional, and i dare say that we've never seen a variation in value when an appraiser looked at a property both ways.
i have to surmise that these 2 appraisals were done by different appraisers, given the discrepancy in value judgments.
but, yes...if you wish to do this refinance, dlibre, go ahead and do it.
i don't know your market but our appraisers provide us with essentially the same report whether fha or conventional, and i dare say that we've never seen a variation in value when an appraiser looked at a property both ways.
i have to surmise that these 2 appraisals were done by different appraisers, given the discrepancy in value judgments.
but, yes...if you wish to do this refinance, dlibre, go ahead and do it.
The appraisals were done by two different appraisers, and they were ordered by one lender. If we do go with the conventional mortgage, can we request that the lender use the FHA appraisal?
Hi dlibre,
I agree with George that there is not much difference in value between an FHA appraisal and a conventional appraisal. The value remains more or less the same.
"If we do go with the conventional mortgage, can we request that the lender use the FHA appraisal?"
I did not understand what you exactly wanted to say. Can you explain? It will be easier for me to answer your query.
Thanks.
I agree with George that there is not much difference in value between an FHA appraisal and a conventional appraisal. The value remains more or less the same.
"If we do go with the conventional mortgage, can we request that the lender use the FHA appraisal?"
I did not understand what you exactly wanted to say. Can you explain? It will be easier for me to answer your query.
Thanks.
If you do the fha loan, the fha appraisal will be used. If you go with a conventional loan, the conventional appraial will apply.
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