ASAP Appraisal Group can help you remove your Private Mortgage Insurance
It's generally understood that a 20% down payment is common when getting a mortgage. The lender's liability is usually only the remainder between the home value and the amount outstanding on the loan, so the 20% adds a nice buffer against the costs of foreclosure, selling the home again, and natural value fluctuations on the chance that a borrower doesn't pay.
During the recent mortgage boom of the mid 2000s, it became customary to see lenders requiring down payments of 10, 5 or often 0 percent. A lender is able to endure the additional risk of the small down payment with Private Mortgage Insurance or PMI. PMI guards the lender if a borrower is unable to pay on the loan and the worth of the house is less than what is owed on the loan.
PMI is costly to a borrower on the grounds that the $40-$50 a month per $100,000 borrowed is compiled into the mortgage payment and often isn't even tax deductible. It's profitable for the lender because they secure the money, and they get paid if the borrower defaults, separate from a piggyback loan where the lender consumes all the damages.
Does your monthly mortgage payment include PMI? Contact us, you may be able to save money by removing your PMI.
How can homebuyers refrain from bearing the cost of PMI?
With the employment of The Homeowners Protection Act of 1998, on nearly all loans lenders are required to automatically terminate the PMI when the principal balance of the loan equals 78 percent of the original loan amount. Savvy home owners can get off the hook sooner than expected. The law stipulates that, at the request of the home owner, the PMI must be released when the principal amount equals just 80 percent.
It can take many years to get to the point where the principal is just 20% of the initial amount of the loan, so it's essential to know how your home has appreciated in value. After all, any 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% mark? Your neighborhood may not be minding the national trends and/or your home could have secured equity before things simmered down, so even when nationwide trends indicate declining home values, you should understand that real estate is local.
A certified, licensed real estate appraiser can help home owners understand just when their home's equity rises above the 20% point, as it's a difficult thing to know. As appraisers, it's our job to know the market dynamics of our area. At ASAP Appraisal Group, we know when property values have risen or declined. We're masters at analyzing value trends in Lakeland, Polk County and surrounding areas. When faced with information from an appraiser, the mortgage company will usually cancel the PMI with little trouble. At which time, the homeowner can relish the savings from that point on.
Want to learn more about PMI and the Homeowners Protection Act? Click this link: