Let APPRAISAL EXPRESS, INC help you figure out if you can eliminate your PMI
When getting a mortgage, a 20% down payment is typically the standard. The lender's liability is oftentimes only the remainder between the home value and the sum outstanding on the loan, so the 20% supplies a nice buffer against the costs of foreclosure, reselling the home, and regular value changes in the event a borrower defaults.
During the recent mortgage boom of the last decade, it was widespread to see lenders taking down payments of 10, 5 or sometimes 0 percent. A lender is able to endure the additional risk of the low down payment with Private Mortgage Insurance or PMI. This added policy covers the lender in case a borrower doesn't pay on the loan and the worth of the house is less than what is owed on the loan.
PMI is pricey to a borrower on the grounds that the $40-$50 a month per $100,000 borrowed is lumped into the mortgage monthly payment and frequently isn't even tax deductible. It's favorable for the lender because they acquire the money, and they get the money if the borrower is unable to pay, different 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 home owners refrain from bearing the expense of PMI?
The Homeowners Protection Act of 1998 forces the lenders on most loans to automatically cancel the PMI when the principal balance of the loan reaches 78 percent of the primary loan amount. Keen homeowners can get off the hook beforehand. The law pledges that, upon request of the home owner, the PMI must be dropped when the principal amount equals just 80 percent.
It can take many years to reach the point where the principal is just 20% of the initial amount of the loan, so it's crucial to know how your home has appreciated in value. After all, every bit of appreciation you've obtained over the years counts towards removing PMI. So why pay it after the balance of your loan has dropped below the 80% mark? Your neighborhood might not be minding the national trends and/or your home might have secured equity before things settled down, so even when nationwide trends hint at declining home values, you should understand that real estate is local.
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 difficult thing to know. It's an appraiser's job to understand the market dynamics of their area. At APPRAISAL EXPRESS, INC, we know when property values have risen or declined. We're experts at pinpointing value trends in Durango, La Plata County and surrounding areas. Faced with data from an appraiser, the mortgage company will generally drop the PMI with little effort. At that time, the homeowner can relish the savings from that point on.
Want to learn more about PMI and the Homeowners Protection Act? Click this link: