Amerappraise, LLC can help you remove your Private Mortgage Insurance
It's largely inferred that a 20% down payment is common when buying a house. Because the risk for the lender is usually only the difference between the home value and the sum remaining on the loan, the 20% adds a nice cushion against the charges of foreclosure, reselling the home, and natural value fluctuationsin the event a borrower is unable to pay.
The market was taking down payments down to 10, 5 and even 0 percent during the mortgage boom of the last decade. A lender is able to endure the increased risk of the small down payment with Private Mortgage Insurance or PMI. PMI protects the lender if a borrower is unable to pay on the loan and the value of the house is lower than the loan balance.
Since the $40-$50 a month per $100,000 borrowed is rolled into the mortgage monthly payment and generally isn't even tax deductible, PMI can be costly to a borrower. Separate from a piggyback loan where the lender consumes all the damages, PMI is money-making for the lender because they obtain the money, and they get paid 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 home owner refrain from paying PMI?
With the implementation of The Homeowners Protection Act of 1998, on most loans lenders are obligated to automatically eliminate the PMI when the principal balance of the loan equals 78 percent of the initial loan amount. The law designates that, at the request of the homeowner, the PMI must be abandoned when the principal amount reaches just 80 percent. So, wise home owners can get off the hook sooner than expected.
It can take countless years to arrive at the point where the principal is only 20% of the initial amount of the loan, so it's important to know how your home has grown in value. After all, any appreciation you've achieved over time counts towards dismissing PMI. So what's the reason for paying it after the balance of your loan has fallen below the 80% threshold? Despite the fact that nationwide trends hint at declining home values, be aware that real estate is local. Your neighborhood might not be adhering to the national trends and/or your home could have gained equity before things simmered down.
A certified, 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 understand the market dynamics of their area. At Amerappraise, LLC, we're experts at determining value trends in Bear, New Castle 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 usually cancel the PMI with little anxiety. At that 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: