Have equity in your home? Want a lower payment? An appraisal from A. M. Appraisals can help you get rid of your PMI.
It's generally understood that a 20% down payment is accepted when purchasing a home. Considering the risk for the lender is oftentimes only the remainder between the home value and the sum due on the loan, the 20% provides a nice buffer against the costs of foreclosure, reselling the home, and natural value variationson the chance that a borrower defaults.
The market was working with down payments as low as 10, 5 and even 0 percent during the mortgage boom of the mid 2000s. A lender is able to endure the additional risk of the reduced down payment with Private Mortgage Insurance or PMI. PMI guards the lender in the event a borrower defaults on the loan and the worth of the property is lower than what is owed on the loan.
PMI is costly to a borrower on the grounds that the $40-$50 a month per $100,000 borrowed is compiled into the mortgage monthly payment and oftentimes isn't even tax deductible. Unlike a piggyback loan where the lender consumes all the losses, PMI is lucrative for the lender because they secure the money, and they get paid if the borrower is unable to pay.
Does your monthly mortgage payment include PMI? Contact us, you may be able to save money by removing your PMI.
How can a buyer keep from paying PMI?
With the employment of The Homeowners Protection Act of 1998, on nearly all loans lenders are required to automatically cease the PMI when the principal balance of the loan equals 78 percent of the initial loan amount. The law stipulates that, at the request of the homeowner, the PMI must be abandoned when the principal amount equals just 80 percent. So, keen home owners can get off the hook a little early.
Because it can take countless years to get to the point where the principal is just 20% of the original amount borrowed, it's necessary to know how your home has grown in value. After all, every bit of appreciation you've acquired over the years counts towards removing PMI. So why pay it after the balance of your loan has dropped below the 80% threshold? Your neighborhood may not be reflecting the national trends and/or your home may have acquired equity before things cooled off, so even when nationwide trends predict declining home values, you should understand that real estate is local.
The hardest thing for many home owners to understand is just when their home's equity rises above the 20% point. An accredited, licensed real estate appraiser can certainly help. It's an appraiser's job to keep up with the market dynamics of their area. At A. M. Appraisals, we know when property values have risen or declined. We're experts at recognizing value trends in West Columbia, Lexington County and surrounding areas. Faced with figures from an appraiser, the mortgage company will usually do away with the PMI with little trouble. At that time, the home owner can relish the savings from that point on.
Want to learn more about PMI and the Homeowners Protection Act? Click this link:
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