Have equity in your home? Want a lower payment? An appraisal from Real Analytics, Inc. can help you get rid of your PMI.
A 20% down payment is usually accepted when buying a house. The lender's liability is oftentimes only the remainder between the home value and the sum remaining on the loan, so the 20% supplies a nice cushion against the expenses of foreclosure, selling the home again, and typical value variations on the chance that a purchaser doesn't pay.
The market was taking down payments down to 10, 5 and even 0 percent in the peak of last decade's mortgage boom. A lender is able to manage the added risk of the small down payment with Private Mortgage Insurance or PMI. PMI protects the lender in the event a borrower defaults on the loan and the worth of the house is less than the balance of the loan.
Since the $40-$50 a month per $100,000 borrowed is bundled into the mortgage payment and generally isn't even tax deductible, PMI is costly to a borrower. It's beneficial for the lender because they collect the money, and they get the money if the borrower is unable to pay, 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 homeowners can prevent bearing the expense of PMI
The Homeowners Protection Act of 1998 forces the lenders on most loans to automatically cease the PMI when the principal balance of the loan equals 78 percent of the original loan amount. Acute homeowners can get off the hook ahead of time. The law designates that, upon request of the home owner, the PMI must be abandoned when the principal amount reaches only 80 percent.
Because it can take countless years to get to the point where the principal is just 20% of the original amount of the loan, it's necessary to know how your home has increased in value. After all, any appreciation you've achieved over the years counts towards removing PMI. So why pay it after your loan balance has fallen below the 80% mark? Your neighborhood might not be adhering to the national trends and/or your home may have secured equity before things settled down, so even when nationwide trends forecast plunging home values, you should realize that real estate is local.
The difficult thing for almost all homeowners to know is just when their home's equity rises above the 20% point. A certified, licensed real estate appraiser can definitely help. As appraisers, it's our job to understand the market dynamics of our area. At Real Analytics, Inc., we know when property values have risen or declined. We're experts at determining value trends in Brevard County, Indian River County, and surrounding areas. Faced with figures from an appraiser, the mortgage company will often cancel the PMI with little effort. At which time, the home owner can enjoy the savings from that point on.
Want to learn more about PMI and the Homeowners Protection Act? Click this link: