Binder and Associates (360) 573-8114 can help you remove your Private Mortgage Insurance
It's widely understood that a 20% down payment is the standard when getting a mortgage. Considering the liability for the lender is oftentimes only the remainder between the home value and the amount outstanding on the loan, the 20% supplies a nice cushion against the costs of foreclosure, selling the home again, and typical value fluctuationson the chance that a borrower doesn't pay.
Lenders were working with down payments as low as 10, 5 and even 0 percent in the peak of last decade's mortgage boom. A lender is able to handle the added risk of the minimal down payment with Private Mortgage Insurance or PMI. This added plan guards the lender if a borrower is unable to pay on the loan and the worth of the house is lower than what is owed on the loan.
PMI can be expensive to a borrower in that the $40-$50 a month per $100,000 borrowed is bundled into the mortgage monthly payment and frequently isn't even tax deductible. It's profitable for the lender because they acquire the money, and they receive payment if the borrower defaults, unlike 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 bearing the cost of PMI?
The Homeowners Protection Act of 1998 requires the lenders on most loans to automatically terminate the PMI when the principal balance of the loan reaches 78 percent of the original loan amount. The law states that, at the request of the homeowner, the PMI must be released when the principal amount equals just 80 percent. So, keen homeowners can get off the hook ahead of time.
Since it can take countless years to reach the point where the principal is just 20% of the initial amount borrowed, it's essential to know how your home has appreciated in value. After all, every bit of appreciation you've achieved over time counts towards dismissing PMI. So what's the reason for paying it after your loan balance has dropped below the 80% threshold? Despite the fact that nationwide trends signify plunging home values, be aware that real estate is local. Your neighborhood may not be adhering to the national trends and/or your home could have acquired equity before things calmed down.
The hardest thing for many home owners to know is just when their home's equity goes over the 20% point. A certified, licensed real estate appraiser can surely help. As appraisers, it's our job to understand the market dynamics of our area. At Binder and Associates (360) 573-8114, we know when property values have risen or declined. We're experts at recognizing value trends in Ridgefield, Clark County and surrounding areas. Faced with figures from an appraiser, the mortgage company will most often cancel the PMI with little anxiety. 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: