Giles Appraisal Group, Inc can help you remove your Private Mortgage Insurance
A 20% down payment is typically accepted when buying a house. Because the risk for the lender is often only the difference between the home value and the amount outstanding on the loan, the 20% supplies a nice buffer against the charges of foreclosure, reselling the home, and regular value fluctuationson the chance that a borrower is unable to pay.
During the recent mortgage upturn of the last decade, it was customary to see lenders commanding down payments of 10, 5 or sometimes 0 percent. A lender is able to endure the additional risk of the small down payment with Private Mortgage Insurance or PMI. PMI guards the lender in the event a borrower doesn't pay on the loan and the market price of the house is lower than the loan balance.
PMI can be expensive to a borrower on the grounds that the $40-$50 a month per $100,000 borrowed is rolled into the mortgage payment and often isn't even tax deductible. It's beneficial for the lender because they obtain the money, and they get the money if the borrower defaults, unlike a piggyback loan where the lender absorbs all the losses.
Does your monthly mortgage payment include PMI? Contact us, you may be able to save money by removing your PMI.
How can a home buyer refrain from paying PMI?
With the implementation of The Homeowners Protection Act of 1998, on most loans lenders are forced to automatically cancel the PMI when the principal balance of the loan equals 78 percent of the primary loan amount. The law states that, upon request of the homeowner, the PMI must be released when the principal amount equals only 80 percent. So, savvy homeowners can get off the hook a little earlier.
Since it can take many years to get to the point where the principal is only 20% of the initial loan amount, it's essential to know how your home has grown in value. After all, all of the appreciation you've gained over the years counts towards abolishing PMI. So why should you pay it after your loan balance has fallen below the 80% threshold? Your neighborhood may not be minding the national trends and/or your home might have secured equity before things cooled off, so even when nationwide trends forecast plunging home values, you should understand that real estate is local.
A certified, licensed real estate appraiser can help home owners understand just when their home's equity rises above the 20% point, as it's a difficult thing to know. As appraisers, it's our job to know the market dynamics of our area. At Giles Appraisal Group, Inc, we know when property values have risen or declined. We're masters at analyzing value trends in Panama City, Fl, Bay County and surrounding areas. When faced with data from an appraiser, the mortgage company will generally cancel the PMI with little anxiety. At which time, the home owner can delight in the savings from that point on.
Want to learn more about PMI and the Homeowners Protection Act? Click this link: