Have equity in your home? Want a lower payment? An appraisal from Allatoona Appraisal can help you get rid of your PMI.

It's widely known that a 20% down payment is common when buying a house. Since the liability for the lender is usually only the remainder between the home value and the amount outstanding on the loan, the 20% adds a nice cushion against the expenses of foreclosure, selling the home again, and regular value fluctuations in the event a borrower doesn't pay.

Lenders were taking down payments as low as 10, 5 and often 0 percent in the peak of last decade's mortgage boom. How does a lender manage the additional risk of the low down payment? The solution is Private Mortgage Insurance or PMI. This supplemental plan takes care of the lender in the event a borrower defaults on the loan and the market price of the home is less than the loan balance.

PMI can be costly to a borrower in that the $40-$50 a month per $100,000 borrowed is bundled into the mortgage payment and many times isn't even tax deductible. As opposed to a piggyback loan where the lender takes in all the deficits, PMI is lucrative for the lender because they obtain the money, and they are covered if the borrower defaults.


Has your real estate appreciated since you first purchased? Contact Allatoona Appraisal today at 678-574-0222 to see if you can get rid of your Private Mortgage Insurance premium.

How can home owners prevent paying PMI?

The Homeowners Protection Act of 1998 obligates the lenders on the majority of loans to automatically terminate the PMI when the principal balance of the loan reaches 78 percent of the original loan amount. Wise home owners can get off the hook a little earlier. The law promises that, upon request of the home owner, the PMI must be released when the principal amount equals only 80 percent.

It can take many years to arrive at the point where the principal is only 80% of the initial loan amount, so it's necessary to know how your Georgia home has grown in value. After all, all of the appreciation you've achieved 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? Even when nationwide trends predict lower overall home values, realize that real estate is local. Your neighborhood may not be following the national trends and/or your home could have secured equity before things cooled off.

An accredited, Georgia licensed real estate appraiser can help home owners figure out if their equity has reached the 20% point, as it's a tough 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 masters at pinpointing value trends in Kennesaw, Cobb County, and surrounding areas. Faced with figures from an appraiser, the mortgage company will most often drop the PMI with little trouble. At which time, the homeowner can delight in the savings from that point on.


Is PMI something increasing your monthly house payment? Call Allatoona Appraisal today at 678-574-0222 or send us an e-mail. Documentation of your home's current value 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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