Have equity in your home? Want a lower payment? An appraisal from APPRAISAL EXPRESS, INC can help you get rid of your PMI.
It's typically known that a 20% down payment is the standard when getting a mortgage. The lender's liability is usually only the remainder between the home value and the amount due on the loan, so the 20% provides a nice buffer against the expenses of foreclosure, reselling the home, and natural value changes on the chance that a borrower doesn't pay.
The market was accepting down payments down to 10, 5 and even 0 percent in the peak of last decade's mortgage boom. How does a lender handle the additional risk of the small down payment? The answer is Private Mortgage Insurance or PMI. PMI takes care of the lender in case a borrower defaults on the loan and the worth of the home is less than the balance of the loan.
PMI can be costly to a borrower on the grounds that the $40-$50 a month per $100,000 borrowed is bundled into the mortgage payment and often isn't even tax deductible. Contradictory to a piggyback loan where the lender takes in all the deficits, PMI is advantageous for the lender because they collect the money, and they receive payment if the borrower is unable to pay.
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 paying PMI?
The Homeowners Protection Act of 1998 requires the lenders on nearly all loans to automatically eliminate the PMI when the principal balance of the loan equals 78 percent of the original loan amount. The law states that, at the request of the homeowner, the PMI must be released when the principal amount reaches just 80 percent. So, acute homeowners can get off the hook sooner than expected.
It can take countless years to reach the point where the principal is only 20% of the original amount borrowed, so it's important to know how your home has increased in value. After all, every bit of appreciation you've accomplished over the years counts towards dismissing PMI. So why should you pay it after your loan balance has dropped below the 80% threshold? Your neighborhood may not be reflecting the national trends and/or your home might have gained equity before things simmered down, so even when nationwide trends predict declining home values, you should realize that real estate is local.
A certified, licensed real estate appraiser can help home owners understand just when their home's equity goes over the 20% point, as it's a hard thing to know. It is an appraiser's job to recognize the market dynamics of their area. At APPRAISAL EXPRESS, INC, we're experts at recognizing value trends in Durango, La Plata County and surrounding areas, and we know when property values have risen or declined. When faced with information from an appraiser, the mortgage company will often cancel the PMI with little anxiety. At which time, the home owner can retain the savings from that point on.
Want to learn more about PMI and the Homeowners Protection Act? Click this link: