Appraisal Services of Brandon, Inc . can help you remove your Private Mortgage Insurance
It's generally known that a 20% down payment is common when getting a mortgage. The lender's liability is oftentimes only the difference between the home value and the sum outstanding on the loan, so the 20% adds a nice cushion against the costs of foreclosure, selling the home again, and typical value fluctuations on the chance that a borrower doesn't pay.
Banks were accepting down payments down to 10, 5 and often 0 percent during the mortgage boom of the last decade. How does a lender handle the added risk of the small down payment? The answer is Private Mortgage Insurance or PMI. This additional plan protects the lender in the event a borrower is unable to pay on the loan and the value of the property is less than what the borrower still owes on the loan.
PMI is pricey to a borrower on the grounds that the $40-$50 a month per $100,000 borrowed is bundled into the mortgage monthly payment and oftentimes isn't even tax deductible. It's beneficial for the lender because they acquire the money, and they get the money if the borrower defaults, contradictory to a piggyback loan where the lender consumes all the deficits.
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 cost of PMI
With the implementation of The Homeowners Protection Act of 1998, on nearly all loans lenders are obligated to automatically stop the PMI when the principal balance of the loan equals 78 percent of the primary loan amount. Keen homeowners can get off the hook beforehand. The law guarantees that, at the request of the home owner, the PMI must be released when the principal amount equals only 80 percent.
Since it can take many years to get to the point where the principal is just 20% of the initial amount borrowed, it's essential to know how your home has appreciated in value. After all, any appreciation you've accomplished over the years counts towards abolishing PMI. So what's the reason for paying it after your loan balance has fallen below the 80% mark? Your neighborhood might not be minding the national trends and/or your home could have gained equity before things settled down, so even when nationwide trends signify decreasing home values, you should understand that real estate is local.
An accredited, licensed real estate appraiser can help homeowners understand just when their home's equity goes over the 20% point, as it's a hard 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 experts at determining value trends in Valrico, Hillsborough County and surrounding areas. When faced with information from an appraiser, the mortgage company will usually cancel the PMI with little trouble. At which time, the home owner can retain the savings from that point on.
Want to learn more about PMI and the Homeowners Protection Act? Click this link: