Allen Appraisal Service can help you remove your Private Mortgage Insurance
When getting a mortgage, a 20% down payment is typically the standard. The lender's risk is generally only the remainder between the home value and the amount outstanding on the loan, so the 20% provides a nice buffer against the expenses of foreclosure, selling the home again, and natural value variations on the chance that a purchaser defaults.
During the recent mortgage boom of the last decade, it was common to see lenders taking down payments of 10, 5 or often 0 percent. How does a lender endure the additional risk of the small down payment? The solution is Private Mortgage Insurance or PMI. This added plan covers the lender if a borrower is unable to pay on the loan and the market price of the house is less than the balance of the loan.
Because the $40-$50 a month per $100,000 borrowed is bundled into the mortgage monthly payment and frequently isn't even tax deductible, PMI is costly to a borrower. It's beneficial for the lender because they acquire the money, and they get the money if the borrower doesn't pay, contradictory to a piggyback loan where the lender takes in all the losses.
Does your monthly mortgage payment include PMI? Contact us, you may be able to save money by removing your PMI.
How can a buyer avoid bearing the expense of PMI?
The Homeowners Protection Act of 1998 forces the lenders on most loans to automatically cancel the PMI when the principal balance of the loan reaches 78 percent of the primary loan amount. Keen home owners can get off the hook a little early. The law promises that, upon request of the homeowner, the PMI must be dropped when the principal amount reaches only 80 percent.
Since it can take countless years to reach the point where the principal is just 20% of the original amount of the loan, it's essential to know how your home has grown in value. After all, any appreciation you've achieved over the years counts towards dismissing PMI. So why pay it after the balance of your loan has fallen below the 80% mark? Despite the fact that nationwide trends forecast decreasing home values, be aware that real estate is local. Your neighborhood might not be following the national trends and/or your home might have gained equity before things settled down.
A certified, licensed real estate appraiser can help homeowners understand just when their home's equity rises above the 20% point, as it's a hard thing to know. It's an appraiser's job to recognize the market dynamics of their area. At Allen Appraisal Service, we know when property values have risen or declined. We're masters at pinpointing value trends in St. George, Washington County and surrounding areas. Faced with data from an appraiser, the mortgage company will usually cancel the PMI with little trouble. At which time, the home owner can delight in the savings from that point on.
Want to learn more about PMI and the Homeowners Protection Act? Click this link:
Would you like to save money by not having to pay for Private Mortgage Insurance? We can help. Simply fill out the form below as completely as possible and we'll send you information on how to save PMI expenses, with no obligation to you. We guarantee your privacy.