Have equity in your home? Want a lower payment? An appraisal from A. M. Appraisals can help you get rid of your PMI.
When buying a house, a 20% down payment is usually the standard. Because the risk for the lender is generally only the difference between the home value and the sum remaining on the loan, the 20% adds a nice buffer against the expenses of foreclosure, selling the home again, and regular value variationson the chance that a purchaser is unable to pay.
The market was accepting down payments down to 10, 5 and often 0 percent during the mortgage boom of the mid 2000s. A lender is able to endure the increased risk of the reduced down payment with Private Mortgage Insurance or PMI. This supplementary plan covers the lender in the event a borrower doesn't pay on the loan and the worth of the property is lower than the balance of the loan.
PMI is costly to a borrower on the grounds that the $40-$50 a month per $100,000 borrowed is lumped into the mortgage monthly payment and frequently isn't even tax deductible. Contradictory to a piggyback loan where the lender absorbs all the costs, PMI is beneficial for the lender because they collect the money, and they receive payment 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 homebuyers can avoid bearing the cost of PMI
The Homeowners Protection Act of 1998 forces the lenders on most loans to automatically terminate the PMI when the principal balance of the loan equals 78 percent of the primary loan amount. The law stipulates that, upon request of the home owner, the PMI must be released when the principal amount reaches only 80 percent. So, wise homeowners can get off the hook sooner than expected.
It can take countless years to get to the point where the principal is only 20% of the original amount of the loan, so it's essential to know how your home has increased in value. After all, any appreciation you've obtained over the years counts towards dismissing PMI. So what's the reason for paying it after the balance of your loan has dropped below the 80% mark? Your neighborhood may not be adopting the national trends and/or your home could have secured equity before things simmered down, so even when nationwide trends forecast decreasing home values, you should understand that real estate is local.
A certified, licensed real estate appraiser can help homeowners understand just when their home's equity goes over the 20% point, as it's a tough thing to know. It is an appraiser's job to understand the market dynamics of their area. At A. M. Appraisals, we're experts at determining value trends in West Columbia, Lexington County and surrounding areas, and we know when property values have risen or declined. When faced with information from an appraiser, the mortgage company will often cancel the PMI with little trouble. At which time, the homeowner can enjoy 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.