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

It's generally known that a 20% down payment is accepted when getting a mortgage. Considering the risk for the lender is usually only the remainder between the home value and the sum remaining on the loan, the 20% adds a nice buffer against the charges of foreclosure, selling the home again, and natural value changes in the event a purchaser is unable to pay.

Lenders were taking down payments as low as 10, 5 and frequently 0 percent in the peak of last decade's mortgage boom. How does a lender endure the additional risk of the small down payment? The solution is Private Mortgage Insurance or PMI. PMI covers the lender in case a borrower defaults on the loan and the market price of the home is less than the balance of the loan.

PMI is costly to a borrower in that the $40-$50 a month per $100,000 borrowed is compiled into the mortgage monthly payment and often isn't even tax deductible. It's beneficial for the lender because they secure the money, and they get the money if the borrower defaults, different from a piggyback loan where the lender absorbs all the deficits.


Has your home value appreciated since you first purchased? Contact Allatoona Appraisal today at 678-574-0222. You may be able to get rid of your Private Mortgage Insurance premium.

How can home owners refrain from bearing the cost of PMI?

The Homeowners Protection Act of 1998 forces the lenders on the majority of loans to automatically eliminate the PMI when the principal balance of the loan equals 78 percent of the beginning loan amount. The law stipulates that, upon request of the homeowner, the PMI must be abandoned when the principal amount equals only 80 percent. So, savvy home owners can get off the hook a little early.

Considering it can take several years to get to the point where the principal is only 80% of the original amount borrowed, it's important to know how your Georgia home has appreciated in value. After all, every bit of appreciation you've achieved over the years counts towards removing PMI. So why should you pay it after the balance of your loan has dropped below the 80% mark? Your neighborhood may not conform to national trends and/or your home may have gained equity before the economy declined. So even when nationwide trends predict a reduction in home values, you should realize that real estate is local.

The difficult thing for most consumers to determine is whether their home equity has exceeded the 20% point. A certified, Georgia licensed real estate appraiser can surely help. Market dynamics and neighborhood-specific pricing trends are an appraiser's primary job! At Allatoona Appraisal, we're experts at determining value trends in Kennesaw, Cobb County, and surrounding areas, and we know when property values have risen or declined. Faced with information from an appraiser, the mortgage company will most often remove the PMI with little trouble. At that time, the home owner can retain the savings from that point on.


The amount you keep from dropping the PMI required when you got your mortgage pays for the appraisal in a matter of months. Nobody is more qualified than Allatoona Appraisal when it comes to appreciating values in Kennesaw and Cobb County. Contact us today.

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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