Have equity in your home? Want a lower payment? An appraisal from Integrity Appraisal Service LLC can help you get rid of your PMI.When getting a mortgage, a 20% down payment is typically the standard. Because the liability for the lender is usually only the difference between the home value and the sum remaining on the loan, the 20% adds a nice buffer against the costs of foreclosure, selling the home again, and typical value fluctuations on the chance that a purchaser doesn't pay.Lenders were working with down payments discounted to 10, 5 and often 0 percent in the peak of last decade's mortgage boom. How does a lender handle the increased risk of the small down payment? The solution is Private Mortgage Insurance or PMI. This supplemental policy takes care of the lender in the event a borrower doesn't pay on the loan and the market price of the home is lower than what is owed on the loan. Because the $40-$50 a month per $100,000 borrowed is bundled into the mortgage payment and often isn't even tax deductible, PMI can be costly to a borrower. As opposed to a piggyback loan where the lender takes in all the costs, PMI is money-making for the lender because they collect the money, and they are covered if the borrower doesn't pay.
How can a homeowner prevent paying PMI?With the implementation of The Homeowners Protection Act of 1998, lenders are obligated to automatically stop the PMI when the principal balance of the loan equals 78 percent of the beginning loan amount on most loans. Smart homeowners can get off the hook a little early. The law stipulates that, at the request of the homeowner, the PMI must be abandoned when the principal amount reaches just 80 percent.It can take several years to get to the point where the principal is only 80% of the initial loan amount, so it's necessary to know how your Georgia home has increased in value. After all, every bit of appreciation you've gained over time counts towards removing PMI. So what's the reason for paying it after your loan balance has dropped below the 80% threshold? Your neighborhood might not adhere to national trends and/or your home could have gained equity before things cooled off. So even when nationwide trends indicate decreasing home values, you should understand that real estate is local. The hardest thing for almost all homeowners to figure out is whether their home equity has exceeded the 20% point. A certified, Georgia licensed real estate appraiser can certainly help. It's an appraiser's job to understand the market dynamics of their area. At Integrity Appraisal Service LLC, we're masters at recognizing value trends in Cartersville, Bartow 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 usually do away with the PMI with little trouble. At which time, the home owner can retain the savings from that point on.
Want to learn more about PMI and the Homeowners Protection Act? Click this link: Cancellation of Private Mortgage Insurance: Federal Law May Save You Hundreds of Dollars Each Year
|
||||||||||||||||||
