Have equity in your home? Want a lower payment? An appraisal from Appraisal Services of Brandon, Inc . can help you get rid of your PMI.
When purchasing a home, a 20% down payment is usually the standard. Considering the liability for the lender is oftentimes only the remainder between the home value and the amount due on the loan, the 20% provides a nice buffer against the costs of foreclosure, reselling the home, and regular value changesin the event a borrower is unable to pay.
During the recent mortgage boom of the mid 2000s, it was customary to see lenders commanding down payments of 10, 5 or sometimes 0 percent. How does a lender manage the added risk of the small down payment? The answer is Private Mortgage Insurance or PMI. This added policy guards the lender in the event a borrower defaults on the loan and the worth of the property is lower than the balance of the loan.
PMI is pricey to a borrower in that the $40-$50 a month per $100,000 borrowed is compiled into the mortgage monthly payment and frequently isn't even tax deductible. It's beneficial for the lender because they collect the money, and they get paid if the borrower doesn't pay, different from a piggyback loan where the lender consumes all the costs.
Does your monthly mortgage payment include PMI? Contact us, you may be able to save money by removing your PMI.
How buyers can refrain from bearing the expense of PMI
The Homeowners Protection Act of 1998 obligates the lenders on most loans to automatically cancel the PMI when the principal balance of the loan equals 78 percent of the primary loan amount. The law states that, upon request of the home owner, the PMI must be abandoned when the principal amount reaches just 80 percent. So, savvy homeowners can get off the hook sooner than expected.
It can take many years to get to the point where the principal is just 20% of the initial amount borrowed, so it's necessary to know how your home has grown in value. After all, all of the appreciation you've acquired over time counts towards removing PMI. So what's the reason for paying it after your loan balance has dropped below the 80% mark? Despite the fact that nationwide trends hint at plummeting home values, realize that real estate is local. Your neighborhood might not be following the national trends and/or your home could have acquired equity before things cooled off.
The hardest thing for almost all home owners to understand is just when their home's equity rises above the 20% point. A certified, licensed real estate appraiser can definitely help. It is an appraiser's job to understand the market dynamics of their area. At Appraisal Services of Brandon, Inc ., we're experts at identifying value trends in Valrico, Hillsborough County and surrounding areas, and we know when property values have risen or declined. When faced with figures from an appraiser, the mortgage company will most often remove the PMI with little effort. At which time, the homeowner can delight in the savings from that point on.
Want to learn more about PMI and the Homeowners Protection Act? Click this link: