Decline PMI--Then What?

[navymom99]

I am buying a condo in FL

If the appraisal comes in lower than the mortgage I asked for, I wish to decline PMI. I have several questions:

1) can the contract be broken and my escrow returned under the above conditions?

2) can the contract be renegotiated with a lower offering price and if declined will my escrow be returned?

3) should I consider paying cash for the property and then getting a home equity loan as opposed to a mortgage?

4) are there any other strategies to employ?

TIA

 

[HomeGuru]

I am buying a condo in FL

If the appraisal comes in lower than the mortgage I asked for, I wish to decline PMI. I have several questions:

**A: then you have serious L/V (loan to value) problems.
**********

1) can the contract be broken and my escrow returned under the above conditions?

**A: it depends upon how your contract was written and the financing contingencies therein.
********

2) can the contract be renegotiated with a lower offering price and if declined will my escrow be returned?

**A: see above.
*******

3) should I consider paying cash for the property and then getting a home equity loan as opposed to a mortgage?

**A: no, why would you want to pay for a property valued at less than appraised value?
*******

4) are there any other strategies to employ?

**A: possibly. Talk to your Realtor and mortgage broker.
******

 

[navymom99]

thanx again for your informative and speedy reply

 

[HomeGuru]

You're very welcome.

 

[lookitsmary]

in florida the lenders give you ltv (loan to value) of the lower of the two...... the sales price or the appraised value. so usually what happens in the cases of lower appraised values is a meeting of the minds with the seller and the buyer and either the seller takes the appraised value and changes the contract to that or you can pay out of closing the difference (depends on how much you love the property to pay more for it than what it is worth) or you get a written letter from the bank stating they are not going to approve the loan as submitted and the reason why and you can pull out of the contract and get your earnest money back.

good luck

 

[HomeGuru]

Or you pay the difference between the amount of the loan and the purchase price in cash (bigger downpayment)

 

[Souix]

I've had this happen a couple of times. The most recent one is the purchase price was $169,500. The VA appraisal only came in at $169,000 (I know, stupid huh?), so the buyer and seller agreed that the new purchase price would be $169,000.

Another time the house agreed on purchase price was $153,000 but the FHA appraisal came in at $149,000. The buyer and seller agreed to split the difference. So the buyer ended up paying $2,000 more than appraised value, but it worked out fine and there wasn't that big of difference.

 

[HomeGuru]

Good helpful scenarios.