Let Herrin Appraisal Company help you figure out if you can get rid of your PMI
A 20% down payment is typically the standard when buying a house. Because the liability for the lender is usually only the difference between the home value and the sum due on the loan, the 20% adds a nice cushion against the costs of foreclosure, selling the home again, and natural value fluctuationsin the event a purchaser is unable to pay.
During the recent mortgage upturn of the mid 2000s, it became customary to see lenders requiring down payments of 10, 5 or sometimes 0 percent. A lender is able to handle the added risk of the small down payment with Private Mortgage Insurance or PMI. This additional plan guards the lender in case a borrower is unable to pay on the loan and the worth of the house is lower than the loan balance.
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 pricey to a borrower. It's advantageous for the lender because they collect the money, and they get paid if the borrower defaults, different from 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 can a homebuyer keep from paying PMI?
With the employment of The Homeowners Protection Act of 1998, on most loans lenders are forced to automatically cease the PMI when the principal balance of the loan reaches 78 percent of the beginning loan amount. The law stipulates that, upon request of the home owner, the PMI must be dropped when the principal amount reaches just 80 percent. So, acute homeowners can get off the hook sooner than expected.
Since it can take countless years to get to the point where the principal is just 20% of the original amount borrowed, it's crucial to know how your home has appreciated in value. After all, every bit of appreciation you've acquired 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, realize that real estate is local. Your neighborhood might not be following the national trends and/or your home may have acquired equity before things cooled off.
An accredited, licensed real estate appraiser can help home owners understand just when their home's equity goes over the 20% point, as it's a tough thing to know. It is an appraiser's job to keep up with the market dynamics of their area. At Herrin Appraisal Company, we know when property values have risen or declined. We're masters at pinpointing value trends in Clemmons, Forsyth County and surrounding areas. Faced with data from an appraiser, the mortgage company will often eliminate the PMI with little anxiety. At which 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:
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