Have equity in your home? Want a lower payment? An appraisal from South Shore Appraisals can help you get rid of your PMI.
It's generally known that a 20% down payment is common when purchasing a home. Considering the liability for the lender is often only the remainder between the home value and the sum due on the loan, the 20% supplies a nice cushion against the costs of foreclosure, selling the home again, and typical value variationsin the event a borrower is unable to pay.
During the recent mortgage upturn of the mid 2000s, it was widespread to see lenders taking down payments of 10, 5 or sometimes 0 percent. A lender is able to endure the additional risk of the low 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 worth of the home is lower than the balance of the loan.
PMI can be pricey to a borrower in that the $40-$50 a month per $100,000 borrowed is compiled into the mortgage monthly payment and oftentimes isn't even tax deductible. It's beneficial for the lender because they acquire the money, and they get the money if the borrower is unable to pay, opposite 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 can a homeowner keep from paying PMI?
The Homeowners Protection Act of 1998 makes the lenders on nearly all loans to automatically terminate the PMI when the principal balance of the loan equals 78 percent of the beginning loan amount. Acute homeowners can get off the hook sooner than expected. The law designates that, at the request of the home owner, the PMI must be released when the principal amount equals only 80 percent.
Because it can take countless years to arrive at the point where the principal is just 20% of the initial loan amount, it's necessary to know how your home has grown in value. After all, any appreciation you've obtained over the years counts towards removing PMI. So what's the reason for paying it after the balance of your loan has dropped below the 80% threshold? Even when nationwide trends signify falling home values, be aware that real estate is local. Your neighborhood might not be reflecting the national trends and/or your home could have gained equity before things cooled off.
The hardest thing for almost all homeowners to understand is just when their home's equity goes over the 20% point. An accredited, licensed real estate appraiser can certainly help. As appraisers, it's our job to understand the market dynamics of our area. At South Shore Appraisals, we're experts at identifying value trends in Schererville, Lake County and surrounding areas, and we know when property values have risen or declined. Faced with data from an appraiser, the mortgage company will most often remove the PMI with little trouble. At that 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: