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

When buying a house, a 20% down payment is usually the standard. Since the risk for the lender is often only the remainder between the home value and the sum due on the loan, the 20% provides a nice cushion against the charges of foreclosure, selling the home again, and regular value variations in the event a purchaser doesn't pay.

During the recent mortgage boom of the mid 2000s, it was customary to see lenders making deals with down payments of 10, 5 or often 0 percent. How does a lender endure the increased risk of the low down payment? The solution is Private Mortgage Insurance or PMI. PMI protects the lender in the event a borrower defaults on the loan and the market price of the property is lower than the balance of the loan.

Since the $40-$50 a month per $100,000 borrowed is rolled into the mortgage monthly payment and frequently isn't even tax deductible, PMI is pricey to a borrower. It's profitable for the lender because they collect the money, and they get paid if the borrower defaults, different from a piggyback loan where the lender takes in all the losses.


Did you secure your mortgage with less than 20% down? Call Allatoona Appraisal today at 678-574-0222. You may be able to get rid of your Private Mortgage Insurance premium.

How home buyers can prevent bearing the cost of PMI

The Homeowners Protection Act of 1998 requires the lenders on the majority of loans to automatically eliminate the PMI when the principal balance of the loan reaches 78 percent of the primary loan amount. The law guarantees that, upon request of the home owner, the PMI must be released when the principal amount reaches only 80 percent. So, acute home owners can get off the hook ahead of time.

Considering it can take a significant number of years to arrive at the point where the principal is only 80% of the original loan amount, it's crucial to know how your Georgia home has appreciated in value. After all, all of the appreciation you've obtained over the years counts towards abolishing PMI. So why pay it after your loan balance has dropped below the 80% mark? Even when nationwide trends forecast decreasing home values, be aware that real estate is local. Your neighborhood might not be minding the national trends and/or your home might have gained equity before things declined.

The difficult thing for most people to determine is whether their home equity has exceeded the 20% point. An accredited, Georgia licensed real estate appraiser can definitely help. It's an appraiser's job to recognize the market dynamics of their area. At Allatoona Appraisal, we know when property values have risen or declined. We're experts at pinpointing value trends in Kennesaw, Cobb County, and surrounding areas. When faced with information from an appraiser, the mortgage company will most often remove the PMI with little anxiety. At that time, the home owner can retain the savings from that point on.


The savings from cancelling your PMI will make up for the cost of the appraisal in no time. 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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