Adam''''''''s Appraisal Services, Inc can help you remove your Private Mortgage Insurance
It's largely understood that a 20% down payment is common when buying a house. Because the liability for the lender is often only the difference between the home value and the amount due on the loan, the 20% provides a nice buffer against the charges of foreclosure, reselling the home, and typical value changeson the chance that a purchaser is unable to pay.
Lenders were working with down payments down to 10, 5 and often 0 percent in the peak of last decade's mortgage boom. A lender is able to handle the additional risk of the low down payment with Private Mortgage Insurance or PMI. PMI protects the lender in the event a borrower doesn't pay on the loan and the value of the house is less than the balance of the loan.
PMI is pricey to a borrower in that the $40-$50 a month per $100,000 borrowed is compiled into the mortgage payment and often isn't even tax deductible. Unlike a piggyback loan where the lender absorbs all the losses, PMI is lucrative for the lender because they secure the money, and they get the money if the borrower is unable to pay.
Does your monthly mortgage payment include PMI? Contact us, you may be able to save money by removing your PMI.
How can a home owner refrain from bearing the expense of PMI?
With the implementation of The Homeowners Protection Act of 1998, on most loans lenders are required to automatically stop the PMI when the principal balance of the loan equals 78 percent of the original loan amount. Smart homeowners can get off the hook a little early. The law guarantees that, upon request of the homeowner, the PMI must be dropped when the principal amount reaches just 80 percent.
Since it can take many years to reach the point where the principal is just 20% of the original amount borrowed, it's necessary to know how your home has appreciated in value. After all, every bit of appreciation you've obtained over the years counts towards abolishing PMI. So why pay it after your loan balance has dropped below the 80% threshold? Despite the fact that nationwide trends predict declining home values, be aware that real estate is local. Your neighborhood may not be adhering to the national trends and/or your home might have secured equity before things settled down.
The difficult thing for most home owners to understand is just when their home's equity goes over the 20% point. An accredited, licensed real estate appraiser can definitely help. As appraisers, it's our job to know the market dynamics of our area. At Adam''''''''s Appraisal Services, Inc, we're experts at recognizing value trends in Idaho Falls, Bonneville County and surrounding areas, and we know when property values have risen or declined. When faced with data from an appraiser, the mortgage company will usually drop the PMI with little trouble. At which time, the home owner can relish the savings from that point on.
Want to learn more about PMI and the Homeowners Protection Act? Click this link: