Have equity in your home? Want a lower payment? An appraisal from Allatoona Appraisal can help you get rid of your PMI.
When purchasing a home, a 20% down payment is typically the standard. Because the risk for the lender is generally only the difference between the home value and the sum due on the loan, the 20% provides a nice buffer against the expenses of foreclosure, selling the home again, and regular value fluctuationson the chance that a purchaser is unable to pay.
Lenders were accepting down payments down to 10, 5 and often 0 percent during the mortgage boom of the last decade. A lender is able to manage the added risk of the reduced down payment with Private Mortgage Insurance or PMI. PMI takes care of the lender in case a borrower defaults on the loan and the worth of the home is lower than the loan balance.
PMI can be pricey to a borrower on the grounds that the $40-$50 a month per $100,000 borrowed is compiled into the mortgage monthly payment and oftentimes isn't even tax deductible. It's favorable for the lender because they obtain the money, and they get paid if the borrower defaults, unlike a piggyback loan where the lender takes in all the damages.
Does your monthly mortgage payment include PMI? Contact us, you may be able to save money by removing your PMI.
How can a home buyer keep from bearing the expense of PMI?
The Homeowners Protection Act of 1998 makes the lenders on most loans to automatically terminate the PMI when the principal balance of the loan reaches 78 percent of the initial loan amount. The law states that, upon request of the home owner, the PMI must be released when the principal amount equals just 80 percent. So, wise homeowners can get off the hook a little early.
It can take many years to arrive at the point where the principal is just 20% of the initial loan amount, so it's crucial to know how your home has increased in value. After all, all of the appreciation you've achieved over the years counts towards dismissing PMI. So why should you pay it after your loan balance has fallen below the 80% threshold? Your neighborhood may not be adopting the national trends and/or your home may have gained equity before things simmered down, so even when nationwide trends forecast declining home values, you should understand that real estate is local.
An accredited, licensed real estate appraiser can help homeowners understand just when their home's equity goes over the 20% point, as it's a hard thing to know. It is an appraiser's job to keep up with the market dynamics of their area. At Allatoona Appraisal, we know when property values have risen or declined. We're experts at identifying value trends in Acworth, Cobb County and surrounding areas. When faced with figures from an appraiser, the mortgage company will generally cancel the PMI with little effort. At that time, the homeowner can relish the savings from that point on.
Want to learn more about PMI and the Homeowners Protection Act? Click this link: