Have equity in your home? Want a lower payment? An appraisal from Giles Appraisal Group, Inc. can help you get rid of your PMI.
A 20% down payment is typically accepted when getting a mortgage. Since the liability for the lender is oftentimes only the remainder between the home value and the sum due on the loan, the 20% adds a nice cushion against the expenses of foreclosure, reselling the home, and typical value variationson the chance that a borrower defaults.
The market was accepting down payments as low as 10, 5 and often 0 percent in the peak of last decade's mortgage boom. How does a lender endure the added risk of the low down payment? The answer is Private Mortgage Insurance or PMI. This supplemental plan covers the lender if a borrower is unable to pay on the loan and the worth of the property is less than what is owed on the loan.
Since the $40-$50 a month per $100,000 borrowed is rolled into the mortgage payment and oftentimes isn't even tax deductible, PMI can be expensive to a borrower. It's beneficial for the lender because they acquire the money, and they get the money if the borrower is unable to pay, opposite 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 can a home buyer keep from bearing the expense of PMI?
The Homeowners Protection Act of 1998 requires the lenders on most loans to automatically eliminate the PMI when the principal balance of the loan equals 78 percent of the initial loan amount. The law pledges that, at the request of the home owner, the PMI must be released when the principal amount reaches only 80 percent. So, acute home owners can get off the hook sooner than expected.
It can take many years to arrive at the point where the principal is only 20% of the initial amount of the loan, so it's necessary to know how your home has increased in value. After all, every bit of appreciation you've gained over the years counts towards removing PMI. So why pay it after your loan balance has dropped below the 80% mark? Despite the fact that nationwide trends predict falling home values, realize that real estate is local. Your neighborhood might not be following the national trends and/or your home could have secured equity before things cooled off.
The difficult 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 surely help. It is an appraiser's job to keep up with the market dynamics of their area. At Giles Appraisal Group, Inc., we're experts at identifying value trends in Panama City, Bay County and surrounding areas, and we know when property values have risen or declined. When faced with data from an appraiser, the mortgage company will most often drop the PMI with little effort. At which time, the homeowner can retain the savings from that point on.
Want to learn more about PMI and the Homeowners Protection Act? Click this link: