Let Allatoona Appraisal help you determine if you can get rid of your PMI

A 20% down payment is usually accepted when getting a mortgage. Because the liability for the lender is oftentimes only the remainder between the home value and the amount outstanding on the loan, the 20% supplies a nice cushion against the charges of foreclosure, reselling the home, and regular value variations on the chance that a purchaser defaults.

During the recent mortgage boom that our country recently experienced, it was widespread to see lenders reducing down payments to 10, 5, 3 or sometimes 0 percent. How does a lender endure the increased risk of the low down payment? The answer is Private Mortgage Insurance or PMI. This added plan guards the lender in case a borrower defaults on the loan and the market price of the house is lower than the balance of the loan.

PMI can be pricey to a borrower because the $40-$50 a month per $100,000 borrowed is rolled into the mortgage payment and often isn't even tax deductible. Separate from a piggyback loan where the lender takes in all the deficits, PMI is money-making for the lender because they obtain the money, and they receive payment if the borrower doesn't pay.


Does your monthly loan payment have a lineitem for PMI? Call Allatoona Appraisal today at 678-574-0222 or send us an e-mail. Documentation of your home's present value could save you thousands.

How can buyers prevent bearing the cost of PMI?

With the implementation of The Homeowners Protection Act of 1998, lenders are required to automatically cease the PMI when the principal balance of the loan equals 78 percent of the initial loan amount on nearly all loans. Savvy home owners 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 reaches only 80 percent.

It can take a significant number of years to arrive at the point where the principal is just 80% of the original amount of the loan, so it's crucial to know how your Georgia home has appreciated in value. After all, every bit of appreciation you've gained over the years counts towards dismissing PMI. So what's the reason for paying it after the balance of your loan has fallen below the 80% threshold? Your neighborhood might not conform to national trends and/or your home might have secured equity before the economy cooled off. So even when nationwide trends predict declining home values, you should realize that real estate is local.

An accredited, Georgia licensed real estate appraiser can help homeowners figure out just when their home's equity rises above the 20% point, as it's a hard thing to know. Market dynamics and neighborhood-specific pricing trends are an appraiser's primary job! At Allatoona Appraisal, we know when property values have risen or declined. We're experts at analyzing value trends in Kennesaw, Cobb County, and surrounding areas. Faced with information from an appraiser, the mortgage company will often do away with the PMI with little anxiety. At that time, the home owner can relish the savings from that point on.


Does your monthly house payment include a fee for PMI? Call Allatoona Appraisal today at 678-574-0222 or send us an e-mail. A current appraisal could save you thousands.

Want to learn more about PMI and the Homeowners Protection Act? Click this link:

Cancellation of Private Mortgage Insurance: Federal Law May Save You Hundreds of Dollars Each Year

 


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