Appraisal Services of Brandon, Inc . can help you remove your Private Mortgage Insurance
A 20% down payment is typically the standard when purchasing a home. The lender's risk is usually only the remainder between the home value and the sum remaining on the loan, so the 20% supplies a nice cushion against the costs of foreclosure, reselling the home, and natural value fluctuations on the chance that a purchaser doesn't pay.
During the recent mortgage upturn of the last decade, it was customary to see lenders commanding down payments of 10, 5 or even 0 percent. A lender is able to manage the added risk of the reduced down payment with Private Mortgage Insurance or PMI. This supplementary plan takes care of the lender if a borrower defaults on the loan and the worth of the house is lower than what the borrower still owes on the loan.
Since the $40-$50 a month per $100,000 borrowed is bundled into the mortgage monthly payment and oftentimes isn't even tax deductible, PMI can be pricey to a borrower. Separate from a piggyback loan where the lender absorbs all the costs, PMI is profitable for the lender because they acquire the money, and they get paid if the borrower is unable to pay.
Does your monthly mortgage payment include PMI? Contact us, you may be able to save money by removing your PMI.
How homebuyers can prevent bearing the expense of PMI
The Homeowners Protection Act of 1998 makes the lenders on most loans to automatically terminate the PMI when the principal balance of the loan equals 78 percent of the beginning loan amount. The law designates that, at the request of the homeowner, the PMI must be abandoned when the principal amount reaches just 80 percent. So, keen home owners can get off the hook a little early.
It can take many years to get to the point where the principal is just 20% of the original amount of the loan, so it's essential to know how your home has grown in value. After all, all of the appreciation you've obtained over the years counts towards dismissing PMI. So why should you pay it after your loan balance has dropped below the 80% threshold? Despite the fact that nationwide trends indicate plunging home values, realize that real estate is local. Your neighborhood may not be following the national trends and/or your home may have acquired equity before things settled down.
A certified, licensed real estate appraiser can help homeowners understand just when their home's equity goes over the 20% point, as it's a difficult thing to know. As appraisers, it's our job to keep up with the market dynamics of our area. At Appraisal Services of Brandon, Inc ., we're masters at identifying value trends in Valrico, Hillsborough County and surrounding areas, and we know when property values have risen or declined. When faced with data from an appraiser, the mortgage company will often remove the PMI with little effort. 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: