Have equity in your home? Want a lower payment? An appraisal from Associate Appraisers of America can help you get rid of your PMI.
A 20% down payment is typically accepted when getting a mortgage. Because the risk for the lender is oftentimes only the difference between the home value and the amount remaining on the loan, the 20% supplies a nice cushion against the expenses of foreclosure, reselling the home, and regular value variationsin the event a borrower doesn't pay.
During the recent mortgage boom of the last decade, it was widespread to see lenders commanding down payments of 10, 5 or often 0 percent. A lender is able to manage the additional risk of the small down payment with Private Mortgage Insurance or PMI. This added plan protects the lender in case a borrower defaults on the loan and the worth of the house is lower than what is owed on the loan.
PMI can be pricey to a borrower on the grounds that the $40-$50 a month per $100,000 borrowed is lumped into the mortgage payment and many times isn't even tax deductible. It's advantageous for the lender because they acquire the money, and they receive payment if the borrower is unable to pay, contradictory to 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 can homebuyers refrain from paying PMI?
With the implementation of The Homeowners Protection Act of 1998, on most loans lenders are forced to automatically cancel the PMI when the principal balance of the loan equals 78 percent of the beginning loan amount. Keen home owners can get off the hook beforehand. The law states that, upon request of the home owner, the PMI must be dropped when the principal amount reaches just 80 percent.
Since it can take many years to arrive at the point where the principal is just 20% of the initial amount of the loan, it's essential to know how your home has grown in value. After all, all of the appreciation you've achieved over the years counts towards dismissing PMI. So why pay it after your loan balance has fallen below the 80% mark? Your neighborhood may not be minding the national trends and/or your home could have gained equity before things calmed down, so even when nationwide trends hint at plummeting home values, you should realize that real estate is local.
An accredited, licensed real estate appraiser can help home owners understand just when their home's equity goes over the 20% point, as it's a difficult thing to know. As appraisers, it's our job to understand the market dynamics of our area. At Associate Appraisers of America, we know when property values have risen or declined. We're masters at pinpointing value trends in Seal Beach, Orange County and surrounding areas. When faced with figures from an appraiser, the mortgage company will usually do away with the PMI with little anxiety. At that time, the homeowner can retain the savings from that point on.
Want to learn more about PMI and the Homeowners Protection Act? Click this link: