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

It's typically known that a 20% down payment is accepted when purchasing a home. The lender's risk is generally only the difference between the home value and the sum due on the loan, so the 20% adds a nice buffer against the charges of foreclosure, reselling the home, and natural value variations in the event a borrower defaults.

The market was accepting down payments discounted to 10, 5 and frequently 0 percent during the mortgage boom of the mid 2000s. A lender is able to manage the additional risk of the minimal down payment with Private Mortgage Insurance or PMI. This added plan covers the lender in the event a borrower doesn't pay on the loan and the market price of the home is less than what is owed on the loan.

Because the $40-$50 a month per $100,000 borrowed is bundled into the mortgage payment and oftentimes isn't even tax deductible, PMI is costly to a borrower. It's favorable for the lender because they collect the money, and they get the money if the borrower defaults, in contrast to a piggyback loan where the lender consumes all the deficits.


Is PMI a lineitem in your monthly house payment? Call Allatoona Appraisal today at 678-574-0222 or send us an e-mail. A new appraisal could save you thousands.

How home buyers can refrain from bearing the cost of PMI

The Homeowners Protection Act of 1998 obligates the lenders on the majority of loans to automatically cease the PMI when the principal balance of the loan equals 78 percent of the original loan amount. Smart homeowners can get off the hook ahead of time. The law promises that, at the request of the home owner, the PMI must be abandoned when the principal amount reaches only 80 percent.

Since it can take many years to get to the point where the principal is only 80% of the initial loan amount, it's important to know how your Georgia home has appreciated in value. After all, any appreciation you've acquired over the years counts towards dismissing PMI. So why should you pay it after the balance of your loan has dropped below the 80% mark? Even when nationwide trends predict declining home values, understand that real estate is local. Your neighborhood may not be minding the national trends and/or your home could have acquired equity before things cooled off.

The hardest thing for almost all homeowners to determine is just when their home's equity rises above 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. When faced with information from an appraiser, the mortgage company will most often cancel the PMI with little anxiety. At that time, the homeowner can delight in the savings from that point on.


Does your monthly mortgage payment have a lineitem 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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