Have equity in your home? Want a lower payment? An appraisal from Allen Appraisal Service can help you get rid of your PMI.
A 20% down payment is usually accepted when purchasing a home. The lender's risk is often only the difference between the home value and the sum due on the loan, so the 20% supplies a nice buffer against the expenses of foreclosure, selling the home again, and regular value changes in the event a purchaser defaults.
During the recent mortgage boom of the last decade, it became widespread to see lenders requiring down payments of 10, 5 or sometimes 0 percent. A lender is able to handle the increased risk of the low down payment with Private Mortgage Insurance or PMI. This added plan takes care of the lender if a borrower doesn't pay on the loan and the worth of the property is lower than the balance of the loan.
PMI can be expensive to a borrower in that the $40-$50 a month per $100,000 borrowed is compiled into the mortgage monthly payment and often isn't even tax deductible. It's lucrative for the lender because they secure the money, and they get the money if the borrower doesn't pay, 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 homeowner avoid bearing the cost of PMI?
The Homeowners Protection Act of 1998 forces the lenders on most loans to automatically eliminate the PMI when the principal balance of the loan reaches 78 percent of the original loan amount. The law stipulates that, upon request of the home owner, the PMI must be abandoned when the principal amount equals only 80 percent. So, acute homeowners can get off the hook a little earlier.
It can take many years to reach the point where the principal is only 20% of the initial amount of the loan, so it's essential to know how your home has appreciated in value. After all, all of the appreciation you've obtained over time counts towards removing PMI. So why should you pay it after your loan balance has dropped below the 80% mark? Your neighborhood might not be adhering to the national trends and/or your home might have acquired equity before things cooled off, so even when nationwide trends forecast falling home values, you should understand that real estate is local.
The hardest thing for most home owners to know is just when their home's equity goes over the 20% point. An accredited, licensed real estate appraiser can certainly help. As appraisers, it's our job to know the market dynamics of our area. At Allen Appraisal Service, we know when property values have risen or declined. We're experts at determining value trends in St. George, Washington County and surrounding areas. Faced with data from an appraiser, the mortgage company will often cancel the PMI with little effort. 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.