The Welter Appraisal Group can help you remove your Private Mortgage Insurance
When purchasing a home, a 20% down payment is typically the standard. Since the liability for the lender is oftentimes only the difference between the home value and the amount remaining on the loan, the 20% adds a nice cushion against the charges of foreclosure, reselling the home, and regular value variationson the chance that a purchaser doesn't pay.
The market was accepting down payments as low as 10, 5 and even 0 percent in the peak of last decade's mortgage boom. A lender is able to manage the additional risk of the small down payment with Private Mortgage Insurance or PMI. PMI takes care of the lender if a borrower defaults on the loan and the market price of the house is lower than what the borrower still owes on the loan.
Since the $40-$50 a month per $100,000 borrowed is lumped into the mortgage payment and generally isn't even tax deductible, PMI can be costly to a borrower. It's advantageous for the lender because they obtain the money, and they get paid if the borrower doesn't pay, opposite 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 buyers can refrain from bearing the expense of PMI
The Homeowners Protection Act of 1998 makes the lenders on most loans to automatically terminate the PMI when the principal balance of the loan reaches 78 percent of the initial loan amount. Acute home owners can get off the hook a little earlier. The law promises that, at the request of the home owner, the PMI must be dropped when the principal amount reaches just 80 percent.
It can take many years to get to the point where the principal is only 20% of the initial amount of the loan, so it's essential to know how your home has increased in value. After all, all of the appreciation you've obtained over the years counts towards abolishing PMI. So what's the reason for paying it after the balance of your loan has dropped below the 80% mark? Your neighborhood may not be minding the national trends and/or your home could have secured equity before things cooled off, so even when nationwide trends hint at plunging home values, you should understand that real estate is local.
An accredited, licensed real estate appraiser can help home owners 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 The Welter Appraisal Group, we know when property values have risen or declined. We're masters at analyzing value trends in Oakhurst, Monmouth County and surrounding areas. When faced with data from an appraiser, the mortgage company will generally drop 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: