Let Appraisal Services of Brandon, Inc . help you learn if you can eliminate your PMI
A 20% down payment is usually the standard when purchasing a home. Because the liability for the lender is generally only the remainder between the home value and the amount outstanding on the loan, the 20% supplies a nice cushion against the expenses of foreclosure, selling the home again, and typical value variationsin the event a borrower defaults.
Lenders were working with down payments down to 10, 5 and even 0 percent during the mortgage boom of the last decade. How does a lender endure the additional risk of the small down payment? The solution is Private Mortgage Insurance or PMI. PMI guards the lender if a borrower doesn't pay on the loan and the worth of the house is lower than the loan balance.
Since the $40-$50 a month per $100,000 borrowed is compiled into the mortgage payment and generally isn't even tax deductible, PMI can be pricey to a borrower. Contradictory to a piggyback loan where the lender absorbs all the deficits, PMI is favorable for the lender because they obtain the money, and they get the money if the borrower doesn't pay.
Does your monthly mortgage payment include PMI? Contact us, you may be able to save money by removing your PMI.
How buyers can avoid bearing the expense of PMI
With the implementation of The Homeowners Protection Act of 1998, on nearly all loans lenders are obligated to automatically cease the PMI when the principal balance of the loan reaches 78 percent of the original loan amount. Keen home owners can get off the hook beforehand. The law pledges that, at the request of the homeowner, the PMI must be dropped when the principal amount reaches only 80 percent.
Because it can take many years to get to the point where the principal is only 20% of the initial loan amount, it's important to know how your home has grown in value. After all, any appreciation you've obtained over time counts towards removing PMI. So why pay it after your loan balance has fallen below the 80% mark? Even when nationwide trends signify decreasing home values, be aware that real estate is local. Your neighborhood might not be heeding the national trends and/or your home might have acquired equity before things settled down.
A certified, licensed real estate appraiser can help home owners understand just when their home's equity rises above the 20% point, as it's a tough thing to know. As appraisers, it's our job to understand the market dynamics of our area. At Appraisal Services of Brandon, Inc ., we know when property values have risen or declined. We're masters at analyzing value trends in Valrico, Hillsborough County and surrounding areas. When faced with data from an appraiser, the mortgage company will often cancel the PMI with little trouble. At that time, the homeowner can retain the savings from that point on.
Want to learn more about PMI and the Homeowners Protection Act? Click this link: