remove pmi and get heloc on primary residence

[Patrick Mortenson]

newbie question about how to remove pmi and get heloc.

we have owned our home for about 4 years now. this is our only house, mortgage is held by freddy mac, servicing company is qrl. the county recently reappraised our house for the next tax year and thinks the value has gone up enough to give me over 20% equity. i called the loan servicing company to ask about dropping pmi. they say they wont go by the county estimate. they want me to pay them to send an appraiser out.

im also considering looking into getting a heloc just to have open as an emergency fund.. which would need another appraisal. 

im wondering if there is a way to somehow do both of these things and only pay for one appraisal. at over 500$ that would be a lot of money for me to pay twice.

also, would there be some kind of conflict there? trying to remove pmi while at the same time opening up a heloc?

[Randy Thomason]

Hi Patrick, You ask some interesting questions.

Yes, your mortgage company is going to hire their appraisal company to value the house so they make sure it is not being over appraised.  Yes you will have to pay for that.  So I would not do it unless you are very sure of the current value.

Your local bank is going to require their appraisal company to do their valuation for the same reason. Two appraisals and tow fees. I would do the PMI one first if you are going to do both. That way you are lowering your payments which helps your debt to income ration with your bank when they are looking at your stats to make you a loan. Also, if it doesn't appraise for what you think it would maybe you wait on getting the Heloc.

I would also caution you on looking to leverage up right now.  Markets are trending down on prices and days on market.  Many believe we are headed down for a while and gettng fully leveraged could create cash flow hardships.  I don't know your financial situation but being fully leveraged in a down market can spell disaster for many people.