Weaver Appraisal Group can help you remove your Private Mortgage Insurance
A 20% down payment is typically the standard when purchasing a home. The lender's liability is oftentimes only the difference between the home value and the amount due on the loan, so the 20% supplies a nice buffer against the expenses of foreclosure, selling the home again, and typical value changes in the event a borrower doesn't pay.
Banks were taking 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 additional plan protects the lender in the event a borrower is unable to pay on the loan and the worth of the home is lower than the balance of the loan.
Since the $40-$50 a month per $100,000 borrowed is bundled into the mortgage payment and many times isn't even tax deductible, PMI can be pricey to a borrower. Different from a piggyback loan where the lender takes in all the losses, PMI is lucrative for the lender because they collect the money, and they get the money 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 homeowner avoid paying PMI?
With the utilization of The Homeowners Protection Act of 1998, on nearly all loans lenders are obligated to automatically terminate the PMI when the principal balance of the loan equals 78 percent of the primary loan amount. Savvy home owners can get off the hook sooner than expected. The law states that, upon request of the home owner, the PMI must be released when the principal amount equals just 80 percent.
Since it can take many years to arrive at the point where the principal is just 20% of the initial amount of the loan, it's crucial to know how your home has increased in value. After all, every bit of appreciation you've achieved over time counts towards dismissing PMI. So why pay it after your loan balance has fallen below the 80% threshold? Despite the fact that nationwide trends predict decreasing home values, realize that real estate is local. Your neighborhood may not be adopting the national trends and/or your home may have acquired equity before things calmed down.
The hardest thing for many homeowners to know is just when their home's equity rises above the 20% point. A certified, licensed real estate appraiser can certainly help. It's an appraiser's job to keep up with the market dynamics of their area. At Weaver Appraisal Group, we know when property values have risen or declined. We're masters at identifying value trends in Butner, Granville County and surrounding areas. When faced with figures from an appraiser, the mortgage company will generally cancel 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: