can help you remove your Private Mortgage Insurance
It's largely inferred that a 20% down payment is common when purchasing a home. Since the risk for the lender is usually only the difference between the home value and the sum outstanding on the loan, the 20% provides a nice buffer against the costs of foreclosure, selling the home again, and regular value changesin the event a borrower doesn't pay.
During the recent mortgage boom of the last decade, it became customary to see lenders taking down payments of 10, 5 or even 0 percent. A lender is able to endure the added risk of the minimal down payment with Private Mortgage Insurance or PMI. This additional policy protects the lender in case a borrower defaults on the loan and the value of the house is lower than what the borrower still owes on the loan.
Because the $40-$50 a month per $100,000 borrowed is lumped into the mortgage monthly payment and generally isn't even tax deductible, PMI can be expensive to a borrower. Contradictory to a piggyback loan where the lender absorbs all the costs, PMI is advantageous for the lender because they secure 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 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 equals 78 percent of the original loan amount. Wise homeowners can get off the hook sooner than expected. The law promises that, at the request of the home owner, the PMI must be dropped when the principal amount reaches just 80 percent.
Because 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 grown in value. After all, every bit of appreciation you've accomplished over the years counts towards removing PMI. So why pay it after your loan balance has fallen below the 80% threshold? Even when nationwide trends indicate plunging home values, understand that real estate is local. Your neighborhood might not be heeding the national trends and/or your home could have acquired equity before things calmed down.
A certified, 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. As appraisers, it's our job to keep up with the market dynamics of our area. At , we're experts at analyzing value trends in , Clark County and surrounding areas, and we know when property values have risen or declined. Faced with information from an appraiser, the mortgage company will most often eliminate the PMI with little anxiety. At that time, the home owner can relish the savings from that point on.
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