Personal Service Realty's Residential Valuation Group can help you remove your Private Mortgage Insurance
It's generally known that a 20% down payment is the standard when buying a house. Since the liability for the lender is usually only the difference between the home value and the amount due on the loan, the 20% adds a nice buffer against the expenses of foreclosure, selling the home again, and natural value variationson the chance that a purchaser defaults.
Lenders were taking down payments as low as 10, 5 and often 0 percent during the mortgage boom of the last decade. How does a lender manage the additional risk of the low down payment? The answer is Private Mortgage Insurance or PMI. PMI guards the lender in the event a borrower doesn't pay on the loan and the value of the property is less than the balance of the loan.
Because the $40-$50 a month per $100,000 borrowed is bundled into the mortgage monthly payment and oftentimes isn't even tax deductible, PMI can be pricey to a borrower. Different from a piggyback loan where the lender takes in all the losses, PMI is money-making for the lender because they obtain the money, and they receive payment 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 buyers can refrain from bearing the cost of PMI
With the utilization of The Homeowners Protection Act of 1998, on most loans lenders are required to automatically terminate the PMI when the principal balance of the loan equals 78 percent of the primary loan amount. Acute homeowners can get off the hook a little earlier. The law designates that, upon request of the homeowner, the PMI must be dropped when the principal amount equals only 80 percent.
It can take many years to arrive at the point where the principal is just 20% of the initial amount of the loan, so it's necessary to know how your home has grown in value. After all, every bit of appreciation you've accomplished over time counts towards abolishing PMI. So why pay it after the balance of your loan has fallen below the 80% mark? Your neighborhood might not be minding the national trends and/or your home might have acquired equity before things simmered down, so even when nationwide trends hint at plummeting home values, you should understand that real estate is local.
The toughest thing for almost all homeowners to know is just when their home's equity goes over the 20% point. An accredited, licensed real estate appraiser can certainly help. It is an appraiser's job to recognize the market dynamics of their area. At Personal Service Realty's Residential Valuation Group, we're experts at identifying value trends in Jacksonville, Duval 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 most often eliminate the PMI with little effort. At that time, the homeowner can delight in the savings from that point on.
Want to learn more about PMI and the Homeowners Protection Act? Click this link:
Would you like to save money by not having to pay for Private Mortgage Insurance? We can help. Simply fill out the form below as completely as possible and we'll send you information on how to save PMI expenses, with no obligation to you. We guarantee your privacy.