Have equity in your home? Want a lower payment? An appraisal from Weaver Appraisal Group can help you get rid of your PMI.
A 20% down payment is usually the standard when buying a house. Considering the risk for the lender is generally only the remainder between the home value and the amount outstanding on the loan, the 20% provides a nice cushion against the costs of foreclosure, reselling the home, and natural value fluctuationson the chance that a purchaser defaults.
The market was accepting down payments as low as 10, 5 and often 0 percent during the mortgage boom of the mid 2000s. A lender is able to manage the added risk of the minimal down payment with Private Mortgage Insurance or PMI. This added policy takes care of the lender if a borrower is unable to pay on the loan and the value of the home is lower than the loan balance.
PMI can be expensive to a borrower on the grounds that the $40-$50 a month per $100,000 borrowed is compiled into the mortgage payment and frequently isn't even tax deductible. Different from a piggyback loan where the lender takes in all the deficits, PMI is favorable for the lender because they secure the money, and they receive payment 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 a buyer refrain from bearing the expense of PMI?
The Homeowners Protection Act of 1998 forces the lenders on most loans to automatically cease the PMI when the principal balance of the loan equals 78 percent of the initial loan amount. Smart home owners can get off the hook a little earlier. The law states that, upon request of the home owner, the PMI must be abandoned when the principal amount reaches just 80 percent.
Since it can take countless years to reach the point where the principal is only 20% of the initial amount borrowed, it's important to know how your home has appreciated in value. After all, all of the appreciation you've obtained over the years counts towards dismissing PMI. So why pay it after the balance of your loan has dropped below the 80% mark? Your neighborhood might not be following the national trends and/or your home could have acquired equity before things settled down, so even when nationwide trends forecast plunging home values, you should understand that real estate is local.
A certified, 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. As appraisers, it's our job to understand the market dynamics of our area. At Weaver Appraisal Group, we know when property values have risen or declined. We're masters at pinpointing value trends in Butner, Granville County and surrounding areas. When faced with figures from an appraiser, the mortgage company will generally eliminate the PMI with little trouble. At which 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: