Have equity in your home? Want a lower payment? An appraisal from All Brevard Certified Appraisals can help you get rid of your PMI.
When getting a mortgage, a 20% down payment is usually the standard. The lender's risk is generally only the difference between the home value and the amount outstanding on the loan, so the 20% supplies a nice buffer against the expenses of foreclosure, selling the home again, and regular value fluctuations in the event a borrower defaults.
During the recent mortgage boom of the last decade, it became widespread to see lenders taking down payments of 10, 5 or even 0 percent. A lender is able to manage the added risk of the minimal down payment with Private Mortgage Insurance or PMI. This added policy guards the lender in the event a borrower is unable to pay on the loan and the worth of the property is less than the balance of the loan.
PMI can be costly to a borrower on the grounds that the $40-$50 a month per $100,000 borrowed is lumped into the mortgage payment and generally isn't even tax deductible. It's lucrative for the lender because they acquire the money, and they receive payment if the borrower is unable to pay, contradictory to a piggyback loan where the lender takes in all the losses.
Does your monthly mortgage payment include PMI? Contact us, you may be able to save money by removing your PMI.
How buyers can prevent bearing the expense of PMI
The Homeowners Protection Act of 1998 obligates the lenders on nearly all loans to automatically cancel the PMI when the principal balance of the loan equals 78 percent of the original loan amount. Smart home owners can get off the hook a little early. The law designates that, upon request of the homeowner, the PMI must be released when the principal amount reaches just 80 percent.
Since it can take many years to arrive at the point where the principal is just 20% of the initial amount of the loan, it's important to know how your home has appreciated in value. After all, all of the appreciation you've accomplished over time counts towards dismissing PMI. So why pay it after the balance of your loan has dropped below the 80% mark? Even when nationwide trends predict decreasing home values, realize that real estate is local. Your neighborhood might not be following the national trends and/or your home could have acquired equity before things settled down.
A certified, 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 understand the market dynamics of their area. At All Brevard Certified Appraisals, we know when property values have risen or declined. We're experts at pinpointing value trends in Melbourne, Brevard County and surrounding areas. Faced with data from an appraiser, the mortgage company will often cancel the PMI with little effort. At that time, the home owner can relish the savings from that point on.
Want to learn more about PMI and the Homeowners Protection Act? Click this link: