Have equity in your home? Want a lower payment? An appraisal from Appraise It, LLC. can help you get rid of your PMI.
It's typically known that a 20% down payment is common when getting a mortgage. The lender's liability is oftentimes only the difference between the home value and the amount remaining on the loan, so the 20% adds a nice buffer against the charges of foreclosure, selling the home again, and natural value variations in the event a borrower is unable to pay.
During the recent mortgage upturn of the mid 2000s, it was common to see lenders commanding down payments of 10, 5 or often 0 percent. A lender is able to handle the additional risk of the reduced down payment with Private Mortgage Insurance or PMI. This added policy takes care of the lender in case a borrower doesn't pay on the loan and the worth of the property is less than the balance of the loan.
PMI can be costly to a borrower because the $40-$50 a month per $100,000 borrowed is bundled into the mortgage monthly payment and frequently isn't even tax deductible. It's money-making for the lender because they obtain the money, and they get paid if the borrower defaults, separate from a piggyback loan where the lender takes in all the damages.
Does your monthly mortgage payment include PMI? Contact us, you may be able to save money by removing your PMI.
How buyers can prevent bearing the expense of PMI
The Homeowners Protection Act of 1998 makes the lenders on nearly all loans to automatically cancel the PMI when the principal balance of the loan reaches 78 percent of the beginning loan amount. Acute homeowners can get off the hook a little early. The law guarantees that, upon request of the homeowner, the PMI must be released when the principal amount equals only 80 percent.
It can take countless years to reach the point where the principal is just 20% of the initial amount borrowed, so it's crucial to know how your home has increased in value. After all, all of the appreciation you've acquired over time counts towards removing 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 adhering to the national trends and/or your home could have acquired equity before things simmered down, so even when nationwide trends forecast plunging home values, you should realize that real estate is local.
A certified, licensed real estate appraiser can help home owners understand just when their home's equity goes over the 20% point, as it's a hard thing to know. It is an appraiser's job to know the market dynamics of their area. At Appraise It, LLC., we know when property values have risen or declined. We're masters at identifying value trends in Mishawka, St Joseph County and surrounding areas. Faced with data from an appraiser, the mortgage company will generally drop the PMI with little anxiety. At which time, the home owner can enjoy the savings from that point on.
Want to learn more about PMI and the Homeowners Protection Act? Click this link: