Have equity in your home? Want a lower payment? An appraisal from Barnes Appraisal Company can help you get rid of your PMI.
When purchasing a home, a 20% down payment is usually the standard. The lender's risk is oftentimes only the remainder between the home value and the sum due on the loan, so the 20% provides a nice cushion against the charges of foreclosure, reselling the home, and natural value variations in the event a purchaser doesn't pay.
Lenders were taking down payments as low as 10, 5 and often 0 percent in the peak of last decade's mortgage boom. How does a lender handle the additional risk of the small down payment? The solution is Private Mortgage Insurance or PMI. This additional plan covers the lender in case a borrower doesn't pay on the loan and the worth of the property is lower than what is owed on the loan.
PMI can be expensive to a borrower on the grounds that the $40-$50 a month per $100,000 borrowed is bundled into the mortgage payment and generally isn't even tax deductible. It's money-making for the lender because they secure the money, and they receive payment if the borrower is unable to pay, separate from a piggyback loan where the lender consumes all the deficits.
Does your monthly mortgage payment include PMI? Contact us, you may be able to save money by removing your PMI.
How can a buyer refrain from bearing the expense of PMI?
The Homeowners Protection Act of 1998 makes the lenders on most loans to automatically eliminate the PMI when the principal balance of the loan equals 78 percent of the beginning loan amount. The law promises that, upon request of the home owner, the PMI must be abandoned when the principal amount reaches just 80 percent. So, keen home owners can get off the hook a little earlier.
Since it can take countless years to get to the point where the principal is just 20% of the original amount of the loan, it's important to know how your home has appreciated in value. After all, all of the appreciation you've obtained over the years counts towards dismissing PMI. So what's the reason for paying it after your loan balance has dropped below the 80% threshold? Even when nationwide trends predict falling home values, be aware that real estate is local. Your neighborhood may not be adhering to the national trends and/or your home may have secured equity before things simmered down.
The hardest thing for most homeowners to know is just when their home's equity goes over the 20% point. A certified, licensed real estate appraiser can certainly help. It is an appraiser's job to know the market dynamics of their area. At Barnes Appraisal Company, we're masters at determining value trends in Lawton, Comanche County and surrounding areas, and we know when property values have risen or declined. Faced with information from an appraiser, the mortgage company will often drop the PMI with little anxiety. At that time, the homeowner can delight in the savings from that point on.
Want to learn more about PMI and the Homeowners Protection Act? Click this link: