PMI Removal with a New Appraisal or Broker Price Opinion

There are two ways to prove your home's value when you ask to cancel PMI. One is an appraisal. The other is a broker price opinion, often called a BPO. They are not the same, and the difference matters.

An appraisal is performed by a licensed appraiser. It includes an interior inspection, a detailed report, and a supported value conclusion. It usually costs between $400 and $700 depending on your market. It takes one to three weeks.

A broker price opinion is performed by a real estate broker or agent. It is based on exterior observation and comparable sales, without a full interior inspection. It usually costs between $100 and $200. It takes about a week.

Most servicers accept one or the other when you are requesting cancellation based on current value. Some accept only an appraisal. Some accept a BPO if the loan is under a certain size. You should ask your servicer which they require before you pay for anything.

Here is when this matters most. If your loan balance is above 80 percent of your original value, but your home has appreciated enough that your current loan to value ratio is below 80 percent, you can still request cancellation under the 80 percent rule if your servicer accepts current value. The calculation is different. Instead of comparing your balance to the original value, they compare it to the new appraised value.

The appraisal or BPO requirement is the main cost of this path. If the servicer rejects the valuation, you are out the money. If they accept it and cancel PMI, you usually recover the cost within a few months.

One important detail. Some servicers require the appraisal to be ordered through their own vendor. You cannot use your own appraiser even if you already have one. That is their policy, and it means you pay their fee, not the market rate.

If your home value has gone up since you bought it, this is worth checking.