A. M. Appraisals can help you remove your Private Mortgage Insurance
When getting a mortgage, a 20% down payment is usually the standard. Considering the liability for the lender is often only the difference between the home value and the sum due on the loan, the 20% adds a nice buffer against the costs of foreclosure, selling the home again, and regular value fluctuationson the chance that a borrower defaults.
During the recent mortgage boom of the last decade, it was customary to see lenders taking down payments of 10, 5 or even 0 percent. A lender is able to handle the added risk of the small down payment with Private Mortgage Insurance or PMI. This supplemental policy guards the lender in the event a borrower doesn't pay on the loan and the market price of the property is lower than what the borrower still owes on the loan.
Because the $40-$50 a month per $100,000 borrowed is bundled into the mortgage payment and generally isn't even tax deductible, PMI can be costly to a borrower. It's beneficial for the lender because they obtain the money, and they receive payment if the borrower is unable to pay, different from a piggyback loan where the lender takes in all the costs.
Does your monthly mortgage payment include PMI? Contact us, you may be able to save money by removing your PMI.
How homebuyers can keep from bearing the expense of PMI
The Homeowners Protection Act of 1998 forces the lenders on most loans to automatically cease the PMI when the principal balance of the loan equals 78 percent of the beginning loan amount. Keen homeowners can get off the hook a little early. The law designates that, at the request of the home owner, the PMI must be dropped when the principal amount equals only 80 percent.
It can take countless years to arrive at the point where the principal is just 20% of the original amount borrowed, so it's crucial to know how your home has appreciated in value. After all, any appreciation you've accomplished over the years counts towards removing PMI. So why should you pay it after your loan balance has fallen below the 80% threshold? Even when nationwide trends signify plunging home values, be aware that real estate is local. Your neighborhood might not be reflecting the national trends and/or your home may have secured equity before things settled down.
The difficult thing for most home owners to know is just when their home's equity goes over the 20% point. An accredited, licensed real estate appraiser can definitely help. It's an appraiser's job to recognize the market dynamics of their area. At A. M. Appraisals, we know when property values have risen or declined. We're experts at identifying value trends in West Columbia, Lexington County and surrounding areas. Faced with information from an appraiser, the mortgage company will most often remove the PMI with little effort. At which 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:
|These articles are property of New York Times and protected by copyright.|
Would you like to save money by not having to pay for Private Mortgage Insurance? We can help. Simply fill out the form below as completely as possible and we'll send you information on how to save PMI expenses, with no obligation to you. We guarantee your privacy.