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Have equity in your home? Want a lower payment? An appraisal from APPRAISAL EXPRESS, INC can help you get rid of your PMI.
When purchasing a home, a 20% down payment is usually the standard.
Since the risk for the lender is often only the difference between the home value and the amount remaining on the loan, the 20% provides a nice buffer against the costs of foreclosure, reselling the home, and regular value changes in the event a purchaser doesn't pay.
Banks were taking down payments dropping to 10, 5 and often 0 percent in the peak of last decade's mortgage boom.
A lender is able to endure the added risk of the reduced down payment with Private Mortgage Insurance or PMI.
PMI guards the lender if a borrower defaults on the loan and the market price of the home is less than what the borrower still owes on the loan.
Since the $40-$50 a month per $100,000 borrowed is lumped into the mortgage payment and frequently isn't even tax deductible, PMI can be pricey to a borrower.
It's lucrative for the lender because they acquire the money, and they get paid if the borrower defaults, different from a piggyback loan where the lender takes in all the costs.
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Does your monthly house payment include a fee PMI? Call APPRAISAL EXPRESS, INC today at (970) 382-8313 or send us an e-mail. A recent appraisal could save you thousands.
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How can a homebuyer refrain from bearing the expense of PMI?
As a result of The Homeowners Protection Act of 1998, lenders are obligated to automatically cancel the PMI when the principal balance of the loan reaches 78 percent of the original loan amount on most loans.
Smart homeowners can get off the hook a little earlier. The law pledges that, at the request of the homeowner, the PMI must be released when the principal amount equals only 80 percent.
Considering it can take several years to arrive at the point where the principal is just 80% of the initial amount of the loan, it's important to know how your Colorado home has appreciated in value.
After all, every bit of appreciation you've gained over the years counts towards removing PMI. So what's the reason for paying it after your loan balance has dropped below the 80% threshold?
Your neighborhood may not follow national trends and/or your home could have acquired equity before things simmered down. So even when nationwide trends forecast decreasing home values, you should understand that real estate is local.
The hardest thing for most people to determine is just when their home's equity rises above the 20% point. A certified, Colorado licensed real estate appraiser can certainly help.
It is an appraiser's job to recognize the market dynamics of their area.
At APPRAISAL EXPRESS, INC, we're experts at pinpointing value trends in Durango, La Plata County, and surrounding areas, and we know when property values have risen or declined.
Faced with data from an appraiser, the mortgage company will most often eliminate the PMI with little effort. At that time, the home owner can delight in the savings from that point on.
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The savings from dropping the PMI required when you got your mortgage will make up for the cost of the appraisal in a matter of months. APPRAISAL EXPRESS, INC has years of experience with value trends in Durango and La Plata County. Contact us today.
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Want to learn more about PMI and the Homeowners Protection Act? Click this link:
Cancellation of Private Mortgage Insurance: Federal Law May Save You Hundreds of Dollars Each Year
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