Edwards Appraisal Service, Inc. can help you remove your Private Mortgage Insurance
When getting a mortgage, a 20% down payment is typically the standard. Considering the risk for the lender is oftentimes only the difference between the home value and the sum due on the loan, the 20% provides a nice buffer against the charges of foreclosure, reselling the home, and typical value changesin the event a borrower defaults.
The market was taking down payments as low as 10, 5 and often 0 percent in the peak of last decade's mortgage boom. A lender is able to handle the increased risk of the minimal down payment with Private Mortgage Insurance or PMI. PMI guards the lender in case a borrower is unable to pay on the loan and the value of the home is less than what is owed on the loan.
PMI is pricey to a borrower because the $40-$50 a month per $100,000 borrowed is lumped into the mortgage payment and generally isn't even tax deductible. Opposite from a piggyback loan where the lender takes in all the losses, PMI is beneficial for the lender because they secure the money, and they receive payment if the borrower defaults.
Does your monthly mortgage payment include PMI? Contact us, you may be able to save money by removing your PMI.
How can home buyers refrain from bearing the expense of PMI?
The Homeowners Protection Act of 1998 requires the lenders on nearly all loans to automatically terminate the PMI when the principal balance of the loan equals 78 percent of the original loan amount. The law states that, upon request of the homeowner, the PMI must be dropped when the principal amount equals only 80 percent. So, acute homeowners can get off the hook a little earlier.
Because it can take countless years to get to the point where the principal is only 20% of the initial amount borrowed, it's important to know how your home has increased in value. After all, any appreciation you've gained over the years counts towards abolishing PMI. So why should you pay it after your loan balance has dropped below the 80% mark? Your neighborhood might not be minding the national trends and/or your home could have secured equity before things cooled off, so even when nationwide trends forecast falling home values, you should realize 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 hard thing to know. As appraisers, it's our job to understand the market dynamics of our area. At Edwards Appraisal Service, Inc., we know when property values have risen or declined. We're experts at pinpointing value trends in Goldsboro, Wayne County and surrounding areas. Faced with figures from an appraiser, the mortgage company will most often remove the PMI with little effort. At which time, the home owner can delight in the savings from that point on.
Want to learn more about PMI and the Homeowners Protection Act? Click this link:
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