APPRAISAL EXPRESS, INC can help you remove your Private Mortgage Insurance
It's largely known that a 20% down payment is common when getting a mortgage. Considering the liability for the lender is generally only the difference between the home value and the amount due on the loan, the 20% provides a nice cushion against the charges of foreclosure, reselling the home, and regular value changesin the event a borrower defaults.
Lenders were accepting down payments as low as 10, 5 and even 0 percent during the mortgage boom of the last decade. A lender is able to manage the added risk of the low down payment with Private Mortgage Insurance or PMI. PMI covers the lender in case a borrower defaults on the loan and the value of the property is lower than the balance of the loan.
Because the $40-$50 a month per $100,000 borrowed is lumped into the mortgage payment and often isn't even tax deductible, PMI can be costly to a borrower. It's beneficial for the lender because they secure the money, and they receive payment if the borrower is unable to pay, contradictory to a piggyback loan where the lender absorbs all the damages.
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 implementation of The Homeowners Protection Act of 1998, on nearly all loans lenders are required to automatically eliminate the PMI when the principal balance of the loan reaches 78 percent of the initial loan amount. Keen homeowners can get off the hook a little early. The law states that, upon request of the home owner, the PMI must be dropped when the principal amount equals only 80 percent.
Considering it can take many years to get to the point where the principal is just 20% of the initial amount borrowed, it's necessary to know how your home has grown in value. After all, all of the appreciation you've achieved over the years counts towards removing PMI. So why should you pay it after your loan balance has dropped below the 80% mark? Your neighborhood may not be minding the national trends and/or your home might have acquired equity before things simmered down, so even when nationwide trends predict plummeting home values, you should understand that real estate is local.
An accredited, licensed real estate appraiser can help homeowners understand just when their home's equity rises above the 20% point, as it's a tough thing to know. As appraisers, it's our job to recognize the market dynamics of our area. At APPRAISAL EXPRESS, INC, we know when property values have risen or declined. We're masters at identifying value trends in Durango, La Plata County and surrounding areas. When faced with data from an appraiser, the mortgage company will most often remove the PMI with little effort. At which time, the homeowner can relish the savings from that point on.
Want to learn more about PMI and the Homeowners Protection Act? Click this link: