Allen Appraisal Service can help you remove your Private Mortgage Insurance
When getting a mortgage, a 20% down payment is typically the standard. Since the liability for the lender is usually only the difference between the home value and the sum outstanding on the loan, the 20% supplies a nice buffer against the costs of foreclosure, selling the home again, and typical value changesin the event a purchaser defaults.
The market was working with 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 low down payment with Private Mortgage Insurance or PMI. PMI covers the lender in the event a borrower is unable to pay on the loan and the worth of the home is lower than the balance of the loan.
PMI can be costly to a borrower on the grounds that the $40-$50 a month per $100,000 borrowed is rolled into the mortgage payment and generally isn't even tax deductible. Opposite from a piggyback loan where the lender absorbs all the losses, PMI is advantageous for the lender because they collect the money, and they get paid if the borrower defaults.
Does your monthly mortgage payment include PMI? Contact us, you may be able to save money by removing your PMI.
How can homebuyers refrain from paying PMI?
With the implementation of The Homeowners Protection Act of 1998, on nearly all loans lenders are forced to automatically terminate the PMI when the principal balance of the loan equals 78 percent of the beginning loan amount. Savvy homeowners can get off the hook ahead of time. The law promises that, upon request of the homeowner, the PMI must be released when the principal amount reaches only 80 percent.
Because it can take many years to arrive at the point where the principal is just 20% of the original amount borrowed, it's necessary to know how your home has increased in value. After all, all of the appreciation you've gained over time counts towards dismissing PMI. So why pay it after your loan balance has dropped below the 80% threshold? Your neighborhood may not be following the national trends and/or your home could have gained equity before things simmered down, so even when nationwide trends signify plunging home values, you should understand that real estate is local.
The hardest thing for almost all home owners to understand is just when their home's equity rises above the 20% point. An accredited, licensed real estate appraiser can certainly help. It's an appraiser's job to understand the market dynamics of their area. At Allen Appraisal Service, we know when property values have risen or declined. We're experts at analyzing value trends in St. George, Washington County and surrounding areas. Faced with information from an appraiser, the mortgage company will often eliminate the PMI with little anxiety. At that time, the homeowner can enjoy 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.