I just built a new home and am finishing up the loan process. In the initial paperwork, the purchase price of the home was supposed to be 270k, but due to additions I wanted it ended up being around 280k. The bank sent an appraiser to the home with the initial paperwork. He quoted the home being worth almost exactly 270k. Since that was 10k shy of what the purchase price would be, that would cause problems. The loan officer talked with the appraiser to see if he could change it. The appraiser then appraised the home at being worth almost exactly 280k.
A second appraiser sent by the county appraised the home to be over 300k. A 20k difference in the value of the home?
So my understanding of private mortgage insurance (PMI) is that I need to pay insurance until 20% of the value of the home is no longer owned by the bank. Or in other words, the bank owns 80% or less of the value of the home. Since the bank appraiser appraised the home at almost exactly the purchase price, that seems like it maximizes the amount I'll have to pay in PMI. However, if the bank were to go by the county appraisal, there is a 20k difference in the value of the home and the loan amount. Does this appraiser have an incentive to value the home as low as possible?
And the property tax goes by the county appraisal, which means the higher the appraisal the more property tax I pay. So does this appraiser has an incentive to value the home higher?
I may be way off base in all this, so please correct me where wrong. Is this legal? Is there anything I can do, like get a different appraisal that the mortgage insurance company would adhere to? Or am I just being paranoid and I should put away my tin hat?