Have equity in your home? Want a lower payment? An appraisal from Mike Noble Appraisals can help you get rid of your PMI.
A 20% down payment is usually accepted when buying a house. The lender's risk is usually only the difference between the home value and the sum remaining on the loan, so the 20% supplies a nice buffer against the costs of foreclosure, reselling the home, and typical value fluctuations on the chance that a purchaser doesn't pay.
The market was accepting down payments down to 10, 5 and even 0 percent during the mortgage boom of the last decade. A lender is able to manage the increased risk of the low down payment with Private Mortgage Insurance or PMI. This added plan takes care of the lender in the event a borrower doesn't pay on the loan and the market price of the home is lower than the loan balance.
PMI can be pricey to a borrower on the grounds that the $40-$50 a month per $100,000 borrowed is rolled into the mortgage payment and often isn't even tax deductible. Different from a piggyback loan where the lender takes in all the deficits, PMI is money-making for the lender because they secure the money, and they get the money 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 home buyers can refrain from bearing the expense of PMI
With the employment of The Homeowners Protection Act of 1998, on nearly all loans lenders are required to automatically stop the PMI when the principal balance of the loan reaches 78 percent of the beginning loan amount. Acute home owners can get off the hook beforehand. 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 countless years to get to the point where the principal is only 20% of the initial amount borrowed, so it's necessary to know how your home has increased in value. After all, any appreciation you've acquired over time counts towards abolishing PMI. So what's the reason for paying it after your loan balance has fallen below the 80% threshold? Even when nationwide trends forecast declining home values, be aware that real estate is local. Your neighborhood may not be minding the national trends and/or your home could have gained equity before things cooled off.
An accredited, licensed real estate appraiser can help homeowners understand just when their home's equity goes over the 20% point, as it's a tough thing to know. As appraisers, it's our job to know the market dynamics of our area. At Mike Noble Appraisals, we're experts at pinpointing value trends in Montgomery, Elmore County and surrounding areas, and we know when property values have risen or declined. When faced with figures from an appraiser, the mortgage company will most often remove the PMI with little effort. At which 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: