Frequently Asked Questions (FAQ)

Q: What is Private Mortgage Insurance (PMI)?
A: Private Mortgage Insurance (PMI) is a cost added to the monthly payment of many conventional loans to protect the lender if the borrower defaults on the loan. By law, lenders are required to remove this monthly (PMI) cost if you have at least 20% equity in your home. Equity is the difference between the loan amount and the value of the property. Some lenders require the loan to be at least one year old before they will consider removing the PMI, therefore, check with your lender for their terms and policies.

Q: How do I remove PMI?
A: The lender will not automatically remove the monthly PMI cost unless you provide a full appraisal report that shows the value of the property is 20% greater than the loan amount. Due to the rapid rise in real estate values, most borrowers that purchased with less than 20% will quickly qualify to have this insurance removed, which can be a substantial savings to the borrower. The appraiser will research recent sales that are comparable to the subject property and determine if there is at least 20% equity in the home. The initial “value check” is free of charge and can be performed within minutes.

Q: What is involved in the appraisal inspection?
A: The appraisal inspection typically takes about 20 to 30 minutes on site and involves the appraiser going through each room of the home and taking notes on the quality and condition of materials, equipment, and features. The appraiser will take interior and exterior photos to include in the report and will tape measure the exterior of the home to compare with the County Assessor's living area measurements. An appraisal inspection is not as detailed as a home inspection.

Q: How long does it take to complete the appraisal?
A: The time it takes to complete a typical appraisal ranges from 3 to 7 working days, depending on the current demands from refinance and purchase lending activity. Because time is of the essence, the appraiser attempts to make contact with the borrower immediately to schedule an appraisal inspection. When the appraisal is completed, the entire report can be transmitted instantly via e-mail or mailed directly to the lender.

Q: Do I get a copy of the appraisal?
A: According to the California Business and Professions Code Section 11423, "a borrower has up to 90 days after the lender has provided notice of their lending decision to submit a written request for a copy of the appraisal." The borrower has the right to receive a copy of the appraisal from the lender, provided he or she has paid for the appraisal and the loan involves a 1 to 4 unit residential property. The appraiser is required to protect the confidential nature of the appraiser-client relationship, and thus is prohibited by law to provide a copy, or disclose the contents of the appraisal to anyone other than the client. The collection of an appraisal fee (or "C.O.D.") directly from the borrower does not render the borrower as the client or entitle them to a copy of the appraisal from the appraiser.

Q: Can I use the appraisal with more than one lender?
A: The lender, who orders the appraisal, owns the appraisal, and their company name is typed onto the appraisal form. At the request of the borrower, the original lender may release the appraisal to another lender by submitting a release letter to the appraiser. However, the original lender is under no obligation to release the original appraisal.

Q: How long is the appraisal good for?
A: Most lenders will accept an appraisal up to 90 days after the effective date of the appraisal.