Home Ownership in El Mirage>Question Details

Taratatro21, Home Buyer in Gilbert, AZ

What do they look for in a BPO to cancel PMI?

Asked by Taratatro21, Gilbert, AZ Tue Jun 25, 2013

i currently have a home that i bought 11 months ago. I owe now approx 107k and the appraisal when i bought it was 115k. I do not want to pay PMI anymore on my convential mortgage. My lender is stating that I need to get a BPO and pay a fee. Is this normal? What type of fee will it be? I want to get new carpet and paint the house.What exactly is a BPO and do should i get new carpet and paint before i do it? What are they looking for with a BPO?

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Jeffrey Masich’s answer
A BPO is a "Brokers Price Opinion" on the current value of the home. The value is estimated by the broker based on the location, condition, features and size of home in relation to the recently sold values of homes in the area.

The lender will order an appraisal or a BPO which are different. Yes, a fee to the independent party that provides the services is to be expected.

Your lender will look for a certain equity value before considering dropping the PMI insurance. Each lender has different requirements based on your credit situation and the collateral value of the home.

Jeffrey Masich, Realtor, GRI, MBA
HomeSmart
Arizona homes and land for purchase or sale
http://ArizonaHomesLand.com
JeffMasich@ArizonaHomesLand.com
480-556-0940
0 votes Thank Flag Link Tue Jun 25, 2013
A BPO is "Broker Price Opinion". A licensed agent is hired to determine the selling price of a real estate property. Today's BPOs are mainly used in situations where lenders and mortgage companies believe the expense and delay of an appraisal to determine the value of properties is unnecessary.
The cost of for a BPO will vary. I don't believe you need to get new carpet and paint before a BPO.

In completing a BPO, I would mainly be looking for mostly the comparable of sold properties in your community. The physical inspection of your property could also affect your property. For example if your property has never been updated and has the original kitchen, and the comparable sold properties all have updated kitchens would affect the value of your home just as much if you had the updated kitchen and the comparable didn't.

Fees for a BPO could range from $75 to $150 each and could be done in days where a appraisal could cost $300 to $2,500 depending on the size of the property and could take weeks.

Normally when a home owner doesn't pay the PMI anymore because their home has equity, the bank generally requires an appraisal to evaluate the validity of the value before they would remove the PMI requirement. I would recommend you verify a BPO will be acceptable. We could give you an idea of your value of your home before you spend the money to verify you will be in the ball park to qualify getting the PMI off. http://realestatevalues.us
0 votes Thank Flag Link Tue Jun 25, 2013
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