kw_uh97 Posted January 10, 2009 Share Posted January 10, 2009 Ok we just closed on a home and our insurance company asking us to increase our monthly payments to cover our home in case the worst happens. The reason they are giving is that their appraisal value of the home is more than the lender's appraisal value. Is this the norm, to ask for an increase or do I have a gripe with the insurance company or the lender. Now I must admit that I did not like the appraisal value from the lender myself but for the insurance company to reinforce my displeasure with the appraisal value by asking for an increase only adds to my suspicion that the lender low balled the appraisal value. By low balling the appraisal value by the lender makes it harder for me from eliminating my PMI in the future.Thanks for any feedback Quote Link to comment Share on other sites More sharing options...
BryanS Posted January 11, 2009 Share Posted January 11, 2009 (edited) You should never couple your lender's appraised value (what they think your house is worth) and the insurance company's appraised value (what it will cost them to rebuild your house). What you pay to acquire a home and what someone has to pay (e.g. you or insurance company) to rebuild the house are typically different (the rebuild cost is in most cases more than what you pay for the house). You can purchase a River Oaks home for $5 million, but its rebuild cost may only be $4 million. Conversely, you can buy a $40,000 home next to an oil refinery in Pasadena, but it may cost $80,000 to rebuild. This is true especially for older neighborhoods. In a brand new subdivision... where you are the first owner of a brand new house... Your lender and insurance appraised values should be extremely close because you are purchasing a recently built, from the ground up, home.How old is your home? Where is it located (in general)? Edited January 11, 2009 by BryanS Quote Link to comment Share on other sites More sharing options...
kw_uh97 Posted January 12, 2009 Author Share Posted January 12, 2009 You should never couple your lender's appraised value (what they think your house is worth) and the insurance company's appraised value (what it will cost them to rebuild your house). What you pay to acquire a home and what someone has to pay (e.g. you or insurance company) to rebuild the house are typically different (the rebuild cost is in most cases more than what you pay for the house). You can purchase a River Oaks home for $5 million, but its rebuild cost may only be $4 million. Conversely, you can buy a $40,000 home next to an oil refinery in Pasadena, but it may cost $80,000 to rebuild. This is true especially for older neighborhoods. In a brand new subdivision... where you are the first owner of a brand new house... Your lender and insurance appraised values should be extremely close because you are purchasing a recently built, from the ground up, home.How old is your home? Where is it located (in general)?Built in 2006 in Pearland. Quote Link to comment Share on other sites More sharing options...
GREASER Posted January 12, 2009 Share Posted January 12, 2009 same here..our replacement is 3x what we paid for the house because of sq. footage. Quote Link to comment Share on other sites More sharing options...
BryanS Posted January 12, 2009 Share Posted January 12, 2009 Built in 2006 in Pearland.I would expect them to be closer... For a 2000 sq foot house... within 50K. So if you bought it for 200K, no more than 250K to rebuild it... Quote Link to comment Share on other sites More sharing options...
TexasVines Posted January 12, 2009 Share Posted January 12, 2009 I had a similar issue where my OLD insurance company wanted to insure me for about double what I paid for the house and my property has two separate houses on it so in case of fire one would probably not be damaged at all VS a cyclone where both might be, but there is still the small value of the land as well that would not be "damaged"the real issue for me was that for even the amount my house is insured for now I can go around the corner to a nicer block in my neighborhood and buy a bigger house in nicer condition and still have money left over and if it is a fire I would probably still have one of the two houses on my original property leftso like I told my old insurance company and my new one.....if there is a fire or a tornado ect. I will probably just collect and walk around the block and buy something else and start over and they can have an empty lot or I will sell it off or what ever.....my house is not worth a TON of money and I am single no dependents and can live where I choose....but it is something to talk about with your agent and I would shop around saved a TON of cash on my new policy and the house is still insured for 20K+ over what I paid for it on the front house alone not including personal items or the back house Quote Link to comment Share on other sites More sharing options...
Recommended Posts
Join the conversation
You can post now and register later. If you have an account, sign in now to post with your account.