Let Mitchell Appraisals help you determine if you can get rid of your PMI
When getting a mortgage, a 20% down payment is usually the standard. Considering the risk for the lender is often only the remainder between the home value and the sum due on the loan, the 20% supplies a nice buffer against the costs of foreclosure, selling the home again, and natural value changeson the chance that a borrower doesn't pay.
During the recent mortgage upturn of the last decade, it was customary to see lenders taking down payments of 10, 5 or sometimes 0 percent. A lender is able to endure the added risk of the low down payment with Private Mortgage Insurance or PMI. PMI guards the lender in case a borrower is unable to pay on the loan and the value of the property is lower than the loan balance.
PMI can be pricey to a borrower on the grounds that the $40-$50 a month per $100,000 borrowed is rolled into the mortgage payment and often isn't even tax deductible. It's lucrative for the lender because they collect the money, and they get the money if the borrower defaults, separate from 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 can home buyers prevent bearing the expense of PMI?
With the utilization of The Homeowners Protection Act of 1998, on nearly all loans lenders are forced to automatically terminate the PMI when the principal balance of the loan equals 78 percent of the primary loan amount. The law pledges that, at the request of the homeowner, the PMI must be released when the principal amount equals just 80 percent. So, acute homeowners can get off the hook ahead of time.
Considering it can take many years to get to the point where the principal is just 20% of the initial amount borrowed, it's important to know how your home has appreciated in value. After all, any appreciation you've achieved over time counts towards removing PMI. So why should you pay it after the balance of your loan has fallen below the 80% mark? Your neighborhood may not be reflecting the national trends and/or your home could have secured equity before things cooled off, so even when nationwide trends predict plunging home values, you should understand that real estate is local.
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 understand the market dynamics of our area. At Mitchell Appraisals, we're experts at analyzing value trends in Navarre, Santa Rosa County and surrounding areas, and we know when property values have risen or declined. Faced with data from an appraiser, the mortgage company will most often eliminate the PMI with little anxiety. At which time, the home owner can enjoy the savings from that point on.
Want to learn more about PMI and the Homeowners Protection Act? Click this link: