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.
When buying a house, a 20% down payment is usually the standard. Because the liability for the lender is generally only the difference between the home value and the sum outstanding on the loan, the 20% provides a nice cushion against the charges of foreclosure, reselling the home, and natural value changesin the event a borrower doesn't pay.
During the recent mortgage upturn of the mid 2000s, it became widespread to see lenders commanding down payments of 10, 5 or often 0 percent. How does a lender endure the added risk of the small down payment? The answer is Private Mortgage Insurance or PMI. PMI protects the lender if a borrower defaults on the loan and the worth of the house is less 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 monthly payment and oftentimes isn't even tax deductible. Separate from a piggyback loan where the lender absorbs all the damages, PMI is money-making for the lender because they collect the money, and they get the money if the borrower doesn't pay.
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 refrain from bearing the cost of PMI?
With the employment of The Homeowners Protection Act of 1998, on most loans lenders are obligated to automatically stop the PMI when the principal balance of the loan equals 78 percent of the initial loan amount. The law pledges that, upon request of the homeowner, the PMI must be released when the principal amount reaches just 80 percent. So, wise homeowners can get off the hook a little earlier.
Since it can take countless years to reach the point where the principal is just 20% of the original amount of the loan, it's crucial to know how your home has increased in value. After all, all of the appreciation you've acquired over time counts towards removing PMI. So why should you pay it after the balance of your loan has fallen below the 80% threshold? Your neighborhood might not be reflecting the national trends and/or your home might have gained equity before things calmed down, so even when nationwide trends hint at decreasing home values, you should understand that real estate is local.
An accredited, licensed real estate appraiser can help home owners understand just when their home's equity rises above the 20% point, as it's a difficult thing to know. It's an appraiser's job to understand the market dynamics of their area. At Personal Service Realty's Residential Valuation Group, we're experts at pinpointing value trends in Jacksonville, Duval County and surrounding areas, and we know when property values have risen or declined. When faced with data from an appraiser, the mortgage company will usually do away with the PMI with little trouble. At that 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:
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