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Let Allatoona Appraisal help you figure out if you can cancel your PMI
When purchasing a home, a 20% down payment is typically the standard.
Since the liability for the lender is often only the difference between the home value and the amount outstanding on the loan, the 20% supplies a nice buffer against the costs of foreclosure, selling the home again, and typical value fluctuations in the event a purchaser is unable to pay.
During the recent mortgage upturn that our country recently experienced, it was widespread to see lenders making deals with down payments of 10, 5, 3 or sometimes 0 percent.
A lender is able to handle the additional risk of the minimal down payment with Private Mortgage Insurance or PMI.
PMI guards the lender if a borrower doesn't pay on the loan and the value of the home is lower than what is owed on the loan.
Because the $40-$50 a month per $100,000 borrowed is bundled into the mortgage monthly payment and many times isn't even tax deductible, PMI can be expensive to a borrower.
It's favorable for the lender because they collect the money, and they get the money if the borrower is unable to pay, in contrast to a piggyback loan where the lender consumes all the costs.
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Does your monthly loan payment include a fee PMI? Call Allatoona Appraisal today at 678-574-0222 or send us an e-mail. A current appraisal could save you thousands.
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How home buyers can avoid bearing the expense of PMI
The Homeowners Protection Act of 1998 obligates the lenders on nearly all loans to automatically eliminate the PMI when the principal balance of the loan equals 78 percent of the initial loan amount.
Savvy homeowners can get off the hook beforehand. The law promises that, at the request of the home owner, the PMI must be abandoned when the principal amount equals only 80 percent.
Since it can take a significant number of years to get to the point where the principal is only 80% of the initial amount of the loan, it's essential to know how your Georgia home has grown in value.
After all, any appreciation you've obtained over the years counts towards dismissing PMI. So what's the reason for paying it after the balance of your loan has dropped below the 80% mark?
Your neighborhood may not adhere to national trends and/or your home may have acquired equity before things cooled off. So even when nationwide trends signify a reduction in home values, you should know most importantly that real estate is local.
A certified, Georgia licensed real estate appraiser can help homeowners figure out just when their home's equity goes over the 20% point, as it's a difficult thing to know.
As appraisers, it's our job to keep up with the market dynamics of our area.
At Allatoona Appraisal, we're masters at pinpointing value trends in Kennesaw, Cobb 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 often remove the PMI with little anxiety. At that time, the home owner can relish the savings from that point on.
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Has your home value appreciated since you first purchased? Contact Allatoona Appraisal today at 678-574-0222 to see if you can cancel your Private Mortgage Insurance payment.
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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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