Have equity in your home? Want a lower payment? An appraisal from APPRAISAL EXPRESS, INC can help you get rid of your PMI.
A 20% down payment is usually the standard when buying a house. Since the risk for the lender is usually only the difference between the home value and the amount outstanding on the loan, the 20% adds a nice buffer against the expenses of foreclosure, selling the home again, and natural value variationsin the event a purchaser defaults.
The market was working with down payments as low as 10, 5 and often 0 percent in the peak of last decade's mortgage boom. How does a lender manage 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 doesn't pay on the loan and the value of the house is less than what the borrower still owes on the loan.
PMI can be pricey to a borrower because the $40-$50 a month per $100,000 borrowed is compiled into the mortgage monthly payment and oftentimes isn't even tax deductible. Opposite from a piggyback loan where the lender takes in all the losses, PMI is advantageous for the lender because they obtain the money, and they receive payment if the borrower doesn't pay.
Does your monthly mortgage payment include PMI? Contact us, you may be able to save money by removing your PMI.
How can a homeowner keep from bearing the cost of PMI?
The Homeowners Protection Act of 1998 forces the lenders on most loans to automatically cease the PMI when the principal balance of the loan equals 78 percent of the beginning loan amount. The law guarantees that, upon request of the homeowner, the PMI must be abandoned when the principal amount reaches just 80 percent. So, keen homeowners can get off the hook a little early.
It can take countless years to reach the point where the principal is only 20% of the original loan amount, so it's necessary to know how your home has increased in value. After all, all of the appreciation you've accomplished over time counts towards dismissing PMI. So why should you pay it after your loan balance has dropped below the 80% threshold? Despite the fact that nationwide trends hint at decreasing home values, be aware that real estate is local. Your neighborhood may not be heeding the national trends and/or your home may have acquired equity before things cooled off.
An accredited, licensed real estate appraiser can help homeowners 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 know the market dynamics of their area. At APPRAISAL EXPRESS, INC, we're masters at pinpointing value trends in Durango, La Plata 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 generally do away with the PMI with little trouble. At which time, the homeowner can enjoy the savings from that point on.
Want to learn more about PMI and the Homeowners Protection Act? Click this link: