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
Arizona homes and land for purchase or sale
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