Have equity in your home? Want a lower payment? An appraisal from ASAP Appraisal Group 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 often only the difference between the home value and the sum remaining on the loan, so the 20% supplies a nice cushion against the charges of foreclosure, reselling the home, and natural value variations in the event a borrower doesn't pay.
Banks were taking down payments down to 10, 5 and often 0 percent in the peak of last decade's mortgage boom. A lender is able to handle the additional risk of the small down payment with Private Mortgage Insurance or PMI. This additional policy covers the lender in the event a borrower is unable to pay on the loan and the worth of the house is less than the balance of the loan.
PMI can be pricey to a borrower in that the $40-$50 a month per $100,000 borrowed is rolled into the mortgage payment and generally isn't even tax deductible. It's advantageous for the lender because they obtain the money, and they get the money if the borrower is unable to pay, separate from a piggyback loan where the lender absorbs all the damages.
Does your monthly mortgage payment include PMI? Contact us, you may be able to save money by removing your PMI.
How home owners can avoid bearing the expense of PMI
The Homeowners Protection Act of 1998 makes the lenders on most loans to automatically eliminate the PMI when the principal balance of the loan equals 78 percent of the primary loan amount. The law pledges that, upon request of the homeowner, the PMI must be abandoned when the principal amount equals just 80 percent. So, wise home owners can get off the hook a little earlier.
It can take many years to get to the point where the principal is only 20% of the initial amount borrowed, so it's crucial to know how your home has appreciated in value. After all, any appreciation you've acquired over the years counts towards dismissing PMI. So what's the reason for paying it after your loan balance has fallen below the 80% mark? Even when nationwide trends indicate declining home values, realize that real estate is local. Your neighborhood may not be adhering to the national trends and/or your home could have secured equity before things simmered down.
The toughest thing for many home owners to understand is just when their home's equity rises above the 20% point. A certified, licensed real estate appraiser can certainly help. As appraisers, it's our job to keep up with the market dynamics of our area. At ASAP Appraisal Group, we're experts at pinpointing value trends in Lakeland, Polk County and surrounding areas, and we know when property values have risen or declined. When faced with figures from an appraiser, the mortgage company will most often do away with the PMI with little trouble. 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: