Weaver Appraisal Group can help you remove your Private Mortgage Insurance
A 20% down payment is typically accepted when getting a mortgage. Considering the liability for the lender is usually only the remainder between the home value and the sum due on the loan, the 20% supplies a nice cushion against the charges of foreclosure, reselling the home, and natural value changeson the chance that a borrower doesn't pay.
During the recent mortgage upturn of the last decade, it was widespread to see lenders taking down payments of 10, 5 or sometimes 0 percent. How does a lender handle the increased risk of the small down payment? The solution is Private Mortgage Insurance or PMI. This supplementary policy covers the lender in case a borrower is unable to pay on the loan and the worth of the property is less than the balance of the loan.
PMI is costly to a borrower in that the $40-$50 a month per $100,000 borrowed is lumped into the mortgage monthly payment and many times isn't even tax deductible. It's money-making for the lender because they secure the money, and they receive payment if the borrower defaults, opposite from a piggyback loan where the lender takes in all the costs.
Does your monthly mortgage payment include PMI? Contact us, you may be able to save money by removing your PMI.
How can a homeowner prevent bearing the expense of PMI?
The Homeowners Protection Act of 1998 makes the lenders on nearly all loans to automatically stop the PMI when the principal balance of the loan equals 78 percent of the primary loan amount. Keen homeowners can get off the hook sooner than expected. The law pledges that, upon request of the home owner, the PMI must be abandoned when the principal amount reaches only 80 percent.
It can take many years to arrive at the point where the principal is only 20% of the initial loan amount, so it's important to know how your home has grown in value. After all, all of the appreciation you've obtained over the years counts towards dismissing PMI. So what's the reason for paying it after the balance of your loan has fallen below the 80% threshold? Despite the fact that nationwide trends predict plummeting home values, be aware that real estate is local. Your neighborhood may not be adopting the national trends and/or your home may have acquired equity before things settled down.
An accredited, licensed real estate appraiser can help homeowners understand just when their home's equity goes over the 20% point, as it's a difficult thing to know. It's an appraiser's job to know the market dynamics of their area. At Weaver Appraisal Group, we know when property values have risen or declined. We're experts at analyzing value trends in Butner, Granville County and surrounding areas. Faced with figures from an appraiser, the mortgage company will most often remove the PMI with little anxiety. At that time, the homeowner can delight in the savings from that point on.
Want to learn more about PMI and the Homeowners Protection Act? Click this link: