Have equity in your home? Want a lower payment? An appraisal from Appraisals Plus can help you get rid of your PMI.
A 20% down payment is usually accepted when buying a house. The lender's risk is usually only the remainder between the home value and the amount outstanding on the loan, so the 20% adds a nice cushion against the charges of foreclosure, reselling the home, and regular value fluctuations in the event a purchaser is unable to pay.
During the recent mortgage upturn of the mid 2000s, it was customary to see lenders requiring down payments of 10, 5 or sometimes 0 percent. A lender is able to handle the increased risk of the reduced down payment with Private Mortgage Insurance or PMI. This added plan covers the lender in the event a borrower is unable to pay on the loan and the worth of the home is less than the balance of the loan.
PMI can be pricey to a borrower on the grounds that the $40-$50 a month per $100,000 borrowed is lumped into the mortgage monthly payment and generally isn't even tax deductible. It's lucrative for the lender because they acquire the money, and they get paid if the borrower doesn't pay, contradictory to 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 prevent bearing the expense of PMI
With the utilization 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 primary loan amount. Keen home owners can get off the hook sooner than expected. The law promises that, at the request of the homeowner, the PMI must be dropped when the principal amount reaches just 80 percent.
It can take countless years to reach the point where the principal is only 20% of the original loan amount, so it's essential to know how your home has grown in value. After all, any appreciation you've acquired over the years counts towards removing PMI. So why pay it after your loan balance has fallen below the 80% threshold? Your neighborhood might not be minding the national trends and/or your home might have secured equity before things calmed down, so even when nationwide trends indicate falling home values, you should realize that real estate is local.
The difficult thing for almost all home owners to know is just when their home's equity rises above 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 Appraisals Plus, we know when property values have risen or declined. We're masters at pinpointing value trends in Philadelphia, Philadelphia County and surrounding areas. When faced with data from an appraiser, the mortgage company will often cancel the PMI with little trouble. At which time, the homeowner can retain the savings from that point on.
Want to learn more about PMI and the Homeowners Protection Act? Click this link: