Appraisal Group One can help you remove your Private Mortgage Insurance
When purchasing a home, a 20% down payment is typically the standard. Since the risk for the lender is usually only the remainder between the home value and the sum remaining on the loan, the 20% provides a nice buffer against the charges of foreclosure, reselling the home, and typical value changesin the event a borrower doesn't pay.
During the recent mortgage upturn of the mid 2000s, it became common to see lenders commanding down payments of 10, 5 or often 0 percent. A lender is able to manage the increased risk of the low down payment with Private Mortgage Insurance or PMI. PMI covers the lender in the event a borrower doesn't pay on the loan and the market price of the home is less than the loan balance.
PMI is pricey to a borrower in that the $40-$50 a month per $100,000 borrowed is lumped into the mortgage monthly payment and many times isn't even tax deductible. It's beneficial for the lender because they obtain the money, and they get the money if the borrower defaults, different from a piggyback loan where the lender absorbs all the damages.
Does your monthly mortgage payment include PMI? Contact us, you may be able to save money by removing your PMI.
How home owners can prevent bearing the expense of PMI
With the utilization of The Homeowners Protection Act of 1998, on nearly all loans lenders are forced to automatically cease the PMI when the principal balance of the loan equals 78 percent of the initial loan amount. Keen homeowners can get off the hook ahead of time. The law guarantees that, upon request of the homeowner, the PMI must be released when the principal amount equals only 80 percent.
Considering it can take countless years to arrive at the point where the principal is just 20% of the initial amount borrowed, it's necessary to know how your home has grown in value. After all, every bit of appreciation you've achieved over time counts towards dismissing PMI. So why should you pay it after the balance of your loan has dropped below the 80% threshold? Despite the fact that nationwide trends hint at declining home values, realize that real estate is local. Your neighborhood might not be adopting the national trends and/or your home might have gained equity before things calmed 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 tough thing to know. It is an appraiser's job to keep up with the market dynamics of their area. At Appraisal Group One, we know when property values have risen or declined. We're experts at determining value trends in Tampa, Hillsborough County and surrounding areas. When faced with information from an appraiser, the mortgage company will usually eliminate the PMI with little anxiety. At that 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: