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 largely inferred that a 20% down payment is accepted when purchasing a home. The lender's risk is often only the remainder between the home value and the sum remaining on the loan, so the 20% provides a nice cushion against the expenses of foreclosure, selling the home again, and regular value variations on the chance that a borrower doesn't pay.
The market was working with down payments down to 10, 5 and even 0 percent in the peak of last decade's mortgage boom. How does a lender endure the additional risk of the small down payment? The answer is Private Mortgage Insurance or PMI. This additional policy guards the lender if a borrower defaults on the loan and the market price of the house is lower than what the borrower still owes on the loan.
Since the $40-$50 a month per $100,000 borrowed is rolled into the mortgage monthly payment and often isn't even tax deductible, PMI is pricey to a borrower. It's lucrative for the lender because they collect the money, and they receive payment if the borrower is unable to pay, unlike a piggyback loan where the lender takes in all the deficits.
Does your monthly mortgage payment include PMI? Contact us, you may be able to save money by removing your PMI.
How can a homebuyer prevent bearing the cost of PMI?
With the employment of The Homeowners Protection Act of 1998, on nearly all loans lenders are obligated to automatically eliminate the PMI when the principal balance of the loan equals 78 percent of the initial loan amount. The law pledges that, upon request of the home owner, the PMI must be abandoned when the principal amount reaches only 80 percent. So, wise home owners can get off the hook sooner than expected.
It can take countless years to arrive at the point where the principal is just 20% of the original amount borrowed, so it's necessary to know how your home has appreciated in value. After all, any appreciation you've acquired over time counts towards abolishing PMI. So why pay it after the balance of your loan has fallen below the 80% mark? Despite the fact that nationwide trends forecast decreasing home values, realize that real estate is local. Your neighborhood might not be adopting the national trends and/or your home may have acquired equity before things settled down.
A certified, licensed real estate appraiser can help homeowners understand just when their home's equity rises above the 20% point, as it's a tough thing to know. It's an appraiser's job to recognize the market dynamics of their area. At ASAP Appraisal Group, we know when property values have risen or declined. We're masters at identifying value trends in Lakeland, Polk County and surrounding areas. When faced with figures from an appraiser, the mortgage company will most often do away with the PMI with little effort. At which time, the homeowner can delight in the savings from that point on.
Want to learn more about PMI and the Homeowners Protection Act? Click this link: