Appraisal Services of Brandon, Inc . can help you remove your Private Mortgage Insurance
It's largely known that a 20% down payment is the standard when getting a mortgage. Because the risk for the lender is generally only the remainder between the home value and the amount outstanding on the loan, the 20% supplies a nice buffer against the charges of foreclosure, selling the home again, and regular value fluctuationsin the event a borrower doesn't pay.
Banks were taking down payments down to 10, 5 and often 0 percent in the peak of last decade's mortgage boom. A lender is able to manage the increased risk of the reduced down payment with Private Mortgage Insurance or PMI. PMI covers the lender in the event a borrower defaults on the loan and the value of the property is lower than the balance of the loan.
Since the $40-$50 a month per $100,000 borrowed is compiled into the mortgage payment and often isn't even tax deductible, PMI can be expensive to a borrower. It's money-making for the lender because they acquire the money, and they receive payment if the borrower defaults, separate 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 home buyers can avoid bearing the cost of PMI
With the utilization of The Homeowners Protection Act of 1998, on most loans lenders are required to automatically cancel the PMI when the principal balance of the loan equals 78 percent of the original loan amount. The law designates that, at the request of the home owner, the PMI must be released when the principal amount equals 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 loan amount, so it's essential to know how your home has appreciated in value. After all, every bit of appreciation you've acquired over time counts towards removing PMI. So what's the reason for paying it after your loan balance has fallen below the 80% mark? Even when nationwide trends predict plummeting home values, realize that real estate is local. Your neighborhood may not be adhering to the national trends and/or your home might have acquired equity before things simmered down.
The difficult thing for most home owners to understand is just when their home's equity rises above the 20% point. An accredited, licensed real estate appraiser can definitely help. As appraisers, it's our job to know the market dynamics of our area. At Appraisal Services of Brandon, Inc ., we know when property values have risen or declined. We're masters at recognizing value trends in Valrico, Hillsborough County and surrounding areas. When faced with information from an appraiser, the mortgage company will often cancel the PMI with little anxiety. 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: