The biggest mistake borrowers make when trying to remove PMI
Search TikTok and you’ll find lots of influencers trying to give advice on removing private mortgage insurance (PMI). Often, they are giving the wrong information on qualification. That’s because the guidelines for removing PMI are quite complicated and nearly impossible to simplify into a 30 second clip. However, sometimes influencers make this one recommendation that could be very harmful to you. They recommend paying for your own appraisal to get started.
Never order your own appraisal to remove PMI
Lenders set the rules for PMI removal on conventional loans. The two largest lenders are Fannie Mae and Freddie Mac. These lenders have a specific list of requirements for appraisals. Your mortgage servicer needs to ensure the appraisal meets these requirements. Therefore, your servicer will generally need to order the appraisal to ensure it meets Fannie and Freddie’s guidelines.
Coze provides a free, instant PMI removal eligibility check. Check how much you could save by dropping PMI.
You often won’t even need an appraisal
Another reason not to order an appraisal is because you usually don’t even need an appraisal to drop your PMI. The most common form of home valuation for dropping PMI is a broker price opinion (BPO). BPOs are much quicker and simpler than a full appraisal. BPOs are also much cheaper than an appraisal. BPOs usually cost $150 - $250, while an appraisal can be $450 - $750+. Fannie and Freddie generally require servicers to order BPOs through them, so you can’t bring your own BPO to your servicer
Don’t order your own appraisal
In summary, never order your own appraisal to start the PMI removal process. That appraisal will almost certainly not be accepted by your mortgage servicer or lender. Furthermore, you likely won’t even need an appraisal. The cheaper and easier alternative, the BPO, is most commonly used for PMI removal.
