Have equity in your home? Want a lower payment? An appraisal from Personal Service Realty's Residential Valuation Group can help you get rid of your PMI.
A 20% down payment is usually accepted when buying a house. Considering the risk for the lender is often only the difference between the home value and the sum outstanding on the loan, the 20% adds a nice cushion against the charges of foreclosure, reselling the home, and typical value fluctuationson the chance that a purchaser doesn't pay.
Lenders were accepting down payments as low as 10, 5 and even 0 percent in the peak of last decade's mortgage boom. How does a lender handle the increased risk of the low down payment? The answer is Private Mortgage Insurance or PMI. PMI takes care of the lender if a borrower is unable to pay on the loan and the worth of the house is less than the loan balance.
PMI is pricey to a borrower on the grounds that the $40-$50 a month per $100,000 borrowed is rolled into the mortgage monthly payment and oftentimes isn't even tax deductible. Contradictory to a piggyback loan where the lender consumes all the costs, PMI is favorable 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 homebuyer refrain from bearing the expense of PMI?
With the implementation of The Homeowners Protection Act of 1998, on most loans lenders are forced to automatically terminate the PMI when the principal balance of the loan equals 78 percent of the primary loan amount. Wise home owners can get off the hook sooner than expected. The law promises that, at the request of the home owner, the PMI must be released when the principal amount equals just 80 percent.
Considering it can take countless years to arrive at the point where the principal is just 20% of the initial amount borrowed, it's crucial to know how your home has appreciated in value. After all, any appreciation you've accomplished over the years counts towards dismissing PMI. So what's the reason for paying 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 might have acquired equity before things settled down, so even when nationwide trends forecast declining 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 hard thing to know. It is an appraiser's job to keep up with the market dynamics of their area. At Personal Service Realty's Residential Valuation Group, we know when property values have risen or declined. We're experts at pinpointing value trends in Jacksonville, Duval County and surrounding areas. Faced with information from an appraiser, the mortgage company will usually cancel the PMI with little effort. 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:
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