Let Shamrock Appraisals, Inc. help you figure out if you can get rid of your PMI
A 20% down payment is usually accepted when getting a mortgage. The lender's risk is oftentimes only the remainder between the home value and the sum due on the loan, so the 20% supplies a nice buffer against the costs of foreclosure, selling the home again, and natural value changes on the chance that a purchaser doesn't pay.
During the recent mortgage boom of the mid 2000s, it became customary to see lenders taking down payments of 10, 5 or often 0 percent. How does a lender endure the added risk of the low down payment? The solution is Private Mortgage Insurance or PMI. This supplementary policy takes care of the lender in case a borrower doesn't pay on the loan and the worth of the house 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 oftentimes isn't even tax deductible. Separate from a piggyback loan where the lender absorbs all the deficits, PMI is beneficial for the lender because they secure the money, and they receive payment if the borrower doesn't pay.
Does your monthly mortgage payment include PMI? Contact us, you may be able to save money by removing your PMI.
How can homeowners prevent bearing the cost of PMI?
With the employment of The Homeowners Protection Act of 1998, on most loans lenders are obligated to automatically stop the PMI when the principal balance of the loan reaches 78 percent of the initial loan amount. Smart homeowners can get off the hook ahead of time. The law pledges that, upon request of the home owner, the PMI must be released when the principal amount reaches only 80 percent.
Since it can take many years to get to the point where the principal is just 20% of the original amount of the loan, it's necessary to know how your home has increased in value. After all, any appreciation you've accomplished over time counts towards removing PMI. So why pay it after the balance of your loan has fallen below the 80% threshold? Even when nationwide trends indicate plunging home values, realize that real estate is local. Your neighborhood might not be adhering to the national trends and/or your home could have acquired equity before things calmed down.
The hardest thing for most home owners to understand is just when their home's equity goes over the 20% point. A certified, licensed real estate appraiser can surely help. It is an appraiser's job to understand the market dynamics of their area. At Shamrock Appraisals, Inc., we're masters at analyzing value trends in Tuscaloosa, Tuscaloosa County and surrounding areas, and we know when property values have risen or declined. When faced with figures from an appraiser, the mortgage company will usually eliminate the PMI with little effort. 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: