The Appraisal Shoppe, Inc. can help you remove your Private Mortgage Insurance
When buying a house, a 20% down payment is usually the standard. Since the liability for the lender is often only the remainder between the home value and the amount outstanding on the loan, the 20% supplies a nice cushion against the charges of foreclosure, selling the home again, and regular value variationson the chance that a borrower is unable to pay.
During the recent mortgage boom of the last decade, it became common to see lenders commanding down payments of 10, 5 or often 0 percent. A lender is able to handle the increased risk of the reduced down payment with Private Mortgage Insurance or PMI. This additional plan guards the lender if a borrower doesn't pay on the loan and the worth of the home is less than what the borrower still owes on the loan.
PMI can be pricey to a borrower on the grounds that the $40-$50 a month per $100,000 borrowed is lumped into the mortgage payment and often isn't even tax deductible. Contradictory to a piggyback loan where the lender consumes all the costs, PMI is beneficial for the lender because they acquire the money, and they receive payment if the borrower is unable to pay.
Does your monthly mortgage payment include PMI? Contact us, you may be able to save money by removing your PMI.
How can a home buyer prevent paying PMI?
With the utilization of The Homeowners Protection Act of 1998, on most loans lenders are forced to automatically stop the PMI when the principal balance of the loan reaches 78 percent of the beginning loan amount. The law designates that, at the request of the home owner, the PMI must be dropped when the principal amount equals only 80 percent. So, keen home owners can get off the hook sooner than expected.
Considering it can take countless years to reach the point where the principal is only 20% of the original amount of the loan, it's necessary to know how your home has appreciated in value. After all, all of the appreciation you've achieved over time counts towards removing PMI. So why should you pay it after your loan balance has fallen below the 80% threshold? Despite the fact that nationwide trends indicate plunging home values, understand that real estate is local. Your neighborhood might not be heeding the national trends and/or your home could have gained equity before things calmed down.
The hardest thing for most home owners to know is just when their home's equity rises above the 20% point. An accredited, licensed real estate appraiser can certainly help. It is an appraiser's job to keep up with the market dynamics of their area. At The Appraisal Shoppe, Inc., we know when property values have risen or declined. We're masters at identifying value trends in Virginia Beach, Virginia Beach City County and surrounding areas. When faced with figures from an appraiser, the mortgage company will generally remove 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: