Let Appraisal Services of Brandon, Inc . help you discover if you can get rid of your PMI
A 20% down payment is usually accepted when purchasing a home. The lender's risk is often only the remainder between the home value and the sum remaining on the loan, so the 20% adds a nice buffer against the expenses of foreclosure, selling the home again, and typical value fluctuations on the chance that a purchaser doesn't pay.
During the recent mortgage boom of the mid 2000s, it was customary to see lenders requiring down payments of 10, 5 or sometimes 0 percent. A lender is able to manage the increased risk of the minimal down payment with Private Mortgage Insurance or PMI. PMI protects the lender if a borrower is unable to pay on the loan and the market price of the house 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 compiled into the mortgage monthly payment and many times isn't even tax deductible. Unlike a piggyback loan where the lender takes in all the deficits, PMI is lucrative for the lender because they secure 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 a home buyer avoid paying PMI?
With the utilization of The Homeowners Protection Act of 1998, on nearly all loans lenders are required to automatically cancel the PMI when the principal balance of the loan equals 78 percent of the initial loan amount. Keen home owners can get off the hook sooner than expected. The law pledges that, upon request of the home owner, the PMI must be abandoned when the principal amount equals only 80 percent.
Considering it can take many years to get to the point where the principal is only 20% of the original amount borrowed, it's essential to know how your home has increased in value. After all, every bit of appreciation you've achieved over time counts towards abolishing PMI. So why should you pay it after your loan balance has fallen below the 80% mark? Even when nationwide trends signify falling home values, be aware that real estate is local. Your neighborhood may not be following the national trends and/or your home might have gained 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 recognize 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 identifying value trends in Valrico, Hillsborough County and surrounding areas. Faced with data from an appraiser, the mortgage company will often cancel the PMI with little anxiety. At which 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: