Have equity in your home? Want a lower payment? An appraisal from Allatoona Appraisal can help you get rid of your PMI.
When getting a mortgage, a 20% down payment is usually the standard. The lender's risk is often only the remainder between the home value and the sum due on the loan, so the 20% supplies a nice cushion against the expenses of foreclosure, selling the home again, and regular value changes in the event a purchaser defaults.
Banks were working with 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 additional risk of the minimal down payment with Private Mortgage Insurance or PMI. This supplementary plan guards the lender in case a borrower defaults on the loan and the worth of the house is lower than the balance of the loan.
Because the $40-$50 a month per $100,000 borrowed is bundled into the mortgage monthly payment and often isn't even tax deductible, PMI can be costly to a borrower. It's lucrative for the lender because they secure the money, and they receive payment if the borrower is unable to pay, different from a piggyback loan where the lender absorbs all the losses.
Does your monthly mortgage payment include PMI? Contact us, you may be able to save money by removing your PMI.
How can a home buyer avoid bearing the expense of PMI?
With the utilization of The Homeowners Protection Act of 1998, on nearly all loans lenders are obligated to automatically eliminate the PMI when the principal balance of the loan equals 78 percent of the initial loan amount. The law designates that, upon request of the home owner, the PMI must be released when the principal amount equals only 80 percent. So, keen homeowners can get off the hook a little early.
It can take countless years to get to the point where the principal is just 20% of the initial amount of the loan, so it's crucial to know how your home has grown in value. After all, all of the appreciation you've gained over the years counts towards removing PMI. So what's the reason for paying it after the balance of your loan has fallen below the 80% threshold? Despite the fact that nationwide trends signify plummeting home values, be aware that real estate is local. Your neighborhood might not be adopting the national trends and/or your home might have secured equity before things cooled off.
The difficult thing for almost all home owners to know 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 know the market dynamics of our area. At Allatoona Appraisal, we know when property values have risen or declined. We're experts at recognizing value trends in Kennesaw, Cobb County and surrounding areas. When faced with information from an appraiser, the mortgage company will generally drop the PMI with little anxiety. At that 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: