Have equity in your home? Want a lower payment? An appraisal from Thornton Appraisal Services can help you get rid of your PMI.
A 20% down payment is typically accepted when getting a mortgage. The lender's liability is usually only the difference between the home value and the amount remaining on the loan, so the 20% provides a nice cushion against the expenses of foreclosure, selling the home again, and natural value fluctuations on the chance that a borrower defaults.
The market was accepting down payments as low as 10, 5 and often 0 percent in the peak of last decade's mortgage boom. A lender is able to handle the increased risk of the minimal down payment with Private Mortgage Insurance or PMI. This added plan protects the lender if a borrower defaults on the loan and the worth of the home is less than what is owed on the loan.
PMI is pricey to a borrower on the grounds that the $40-$50 a month per $100,000 borrowed is rolled into the mortgage monthly payment and frequently isn't even tax deductible. It's favorable for the lender because they collect the money, and they get paid if the borrower doesn't pay, 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 homeowners can prevent paying PMI
The Homeowners Protection Act of 1998 makes the lenders on most loans to automatically cease the PMI when the principal balance of the loan equals 78 percent of the initial loan amount. The law guarantees that, upon request of the homeowner, the PMI must be dropped when the principal amount reaches only 80 percent. So, acute homeowners can get off the hook ahead of time.
It can take many years to arrive at the point where the principal is only 20% of the original loan amount, so it's important to know how your home has appreciated in value. After all, any appreciation you've acquired over the years counts towards abolishing PMI. So what's the reason for paying it after your loan balance has fallen below the 80% threshold? Your neighborhood may not be heeding the national trends and/or your home could have gained equity before things settled down, so even when nationwide trends predict plunging home values, you should realize that real estate is local.
The toughest thing for almost all homeowners to understand is just when their home's equity goes over the 20% point. A certified, licensed real estate appraiser can definitely help. As appraisers, it's our job to know the market dynamics of our area. At Thornton Appraisal Services, we're experts at analyzing value trends in Crestline, Cherokee County and surrounding areas, and we know when property values have risen or declined. Faced with data from an appraiser, the mortgage company will generally cancel the PMI with little effort. At which time, the home owner can relish the savings from that point on.
Want to learn more about PMI and the Homeowners Protection Act? Click this link: