Asset Appraisal Services can help you remove your Private Mortgage Insurance
It's generally understood that a 20% down payment is accepted when getting a mortgage. Considering 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 cushion against the expenses of foreclosure, selling the home again, and typical value variationson the chance that a purchaser doesn't pay.
Lenders were working with down payments down to 10, 5 and often 0 percent during the mortgage boom of the mid 2000s. How does a lender endure the increased risk of the small down payment? The answer is Private Mortgage Insurance or PMI. PMI guards the lender if a borrower doesn't pay on the loan and the market price of the home is lower than the loan balance.
PMI can be pricey to a borrower on the grounds that the $40-$50 a month per $100,000 borrowed is bundled into the mortgage payment and many times isn't even tax deductible. Different from a piggyback loan where the lender consumes all the deficits, PMI is profitable for the lender because they obtain 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 homeowners refrain from paying PMI?
With the implementation of The Homeowners Protection Act of 1998, on most loans lenders are required to automatically terminate the PMI when the principal balance of the loan equals 78 percent of the beginning loan amount. Smart homeowners can get off the hook beforehand. The law stipulates that, upon request of the homeowner, the PMI must be released when the principal amount reaches only 80 percent.
It can take countless years to get to the point where the principal is just 20% of the initial amount of the loan, so it's important to know how your home has increased in value. After all, all of the appreciation you've acquired 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 be minding the national trends and/or your home could have acquired equity before things settled down, so even when nationwide trends forecast decreasing home values, you should realize that real estate is local.
An accredited, 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's an appraiser's job to keep up with the market dynamics of their area. At Asset Appraisal Services, we know when property values have risen or declined. We're experts at analyzing value trends in Spokane, Spokane County and surrounding areas. When faced with data from an appraiser, the mortgage company will usually cancel the PMI with little effort. 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: