Corrie Appraisal & Consulting, Inc. can help you remove your Private Mortgage Insurance
A 20% down payment is typically accepted when buying a house. Considering the risk for the lender is generally only the remainder between the home value and the amount due on the loan, the 20% adds a nice cushion against the expenses of foreclosure, selling the home again, and natural value fluctuationson the chance that a borrower defaults.
The market was working with down payments down to 10, 5 and often 0 percent in the peak of last decade's mortgage boom. How does a lender endure the additional risk of the low down payment? The solution is Private Mortgage Insurance or PMI. This added plan guards the lender in the event a borrower is unable to pay on the loan and the worth of the house is less than the loan balance.
Since the $40-$50 a month per $100,000 borrowed is bundled into the mortgage payment and oftentimes isn't even tax deductible, PMI can be pricey to a borrower. It's favorable for the lender because they secure the money, and they get the money if the borrower doesn't pay, different from a piggyback loan where the lender consumes all the costs.
Does your monthly mortgage payment include PMI? Contact us, you may be able to save money by removing your PMI.
How buyers can keep from bearing the cost of PMI
The Homeowners Protection Act of 1998 requires the lenders on nearly all loans to automatically stop 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 released when the principal amount equals only 80 percent. So, savvy homeowners can get off the hook a little early.
It can take many years to arrive at the point where the principal is just 20% of the initial loan amount, so it's crucial to know how your home has grown in value. After all, every bit of appreciation you've accomplished over the years counts towards removing PMI. So why pay it after your loan balance has dropped below the 80% mark? Even when nationwide trends indicate falling home values, understand that real estate is local. Your neighborhood might not be adhering to the national trends and/or your home might have acquired equity before things calmed 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 recognize the market dynamics of our area. At Corrie Appraisal & Consulting, Inc., we're experts at analyzing value trends in Charleston, Coles 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 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: