Have equity in your home? Want a lower payment? An appraisal from Appraisals Northwest can help you get rid of your PMI.
A 20% down payment is typically accepted when getting a mortgage. Considering the risk for the lender is usually only the remainder between the home value and the amount remaining on the loan, the 20% provides a nice buffer against the costs of foreclosure, reselling the home, and regular value variationson the chance that a borrower doesn't pay.
During the recent mortgage boom of the last decade, it was common to see lenders taking down payments of 10, 5 or often 0 percent. A lender is able to handle the additional risk of the minimal down payment with Private Mortgage Insurance or PMI. PMI takes care of the lender in the event a borrower is unable to pay on the loan and the worth of the property is less than the balance of the loan.
PMI can be costly to a borrower on the grounds that the $40-$50 a month per $100,000 borrowed is rolled into the mortgage monthly payment and many times isn't even tax deductible. It's money-making for the lender because they acquire the money, and they get paid if the borrower doesn't pay, opposite from a piggyback loan where the lender consumes 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 home buyer keep from paying PMI?
With the implementation of The Homeowners Protection Act of 1998, on nearly all loans lenders are forced to automatically eliminate the PMI when the principal balance of the loan reaches 78 percent of the initial loan amount. Savvy home owners can get off the hook ahead of time. The law promises that, upon request of the homeowner, the PMI must be abandoned when the principal amount reaches just 80 percent.
Because it can take many years to reach the point where the principal is just 20% of the original amount borrowed, it's crucial to know how your home has grown in value. After all, every bit of appreciation you've achieved over the years counts towards dismissing PMI. So why should you pay it after your loan balance has fallen below the 80% threshold? Despite the fact that nationwide trends forecast plunging home values, understand that real estate is local. Your neighborhood may not be reflecting the national trends and/or your home could have acquired equity before things calmed down.
The hardest thing for most home owners to know is just when their home's equity goes over the 20% point. An accredited, licensed real estate appraiser can surely help. As appraisers, it's our job to understand the market dynamics of our area. At Appraisals Northwest, we're experts at analyzing value trends in Usk, Pend Oreille County and surrounding areas, and we know when property values have risen or declined. When faced with information from an appraiser, the mortgage company will generally remove the PMI with little effort. At that time, the homeowner can enjoy the savings from that point on.
Want to learn more about PMI and the Homeowners Protection Act? Click this link: