Shamrock Appraisals, Inc. can help you remove your Private Mortgage Insurance

When buying a house, a 20% down payment is typically the standard. The lender's liability is oftentimes only the difference between the home value and the amount due on the loan, so the 20% supplies a nice buffer against the costs of foreclosure, reselling the home, and typical value changes in the event a borrower defaults.

During the recent mortgage upturn of the last decade, it was customary to see lenders requiring down payments of 10, 5 or sometimes 0 percent. A lender is able to manage the additional risk of the small down payment with Private Mortgage Insurance or PMI. This added plan protects the lender if a borrower is unable to pay on the loan and the market price of the house is less than the loan balance.

PMI can be pricey to a borrower on the grounds that the $40-$50 a month per $100,000 borrowed is rolled into the mortgage monthly payment and frequently isn't even tax deductible. Different from a piggyback loan where the lender takes in all the losses, PMI is advantageous for the lender because they obtain 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 buyers can keep from bearing the cost of PMI

With the implementation of The Homeowners Protection Act of 1998, on most loans lenders are forced to automatically eliminate the PMI when the principal balance of the loan equals 78 percent of the initial loan amount. The law pledges that, at the request of the home owner, the PMI must be abandoned when the principal amount equals only 80 percent. So, smart home owners can get off the hook a little earlier.

Because it can take countless years to get to the point where the principal is only 20% of the original loan amount, it's essential to know how your home has increased in value. After all, any appreciation you've achieved over the years counts towards removing 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 hint at plummeting home values, be aware that real estate is local. Your neighborhood might not be adhering to the national trends and/or your home may have secured equity before things settled down.

The difficult thing for almost all homeowners to understand is just when their home's equity rises above the 20% point. An accredited, licensed real estate appraiser can certainly help. It's an appraiser's job to recognize the market dynamics of their area. At Shamrock Appraisals, Inc., we're experts at recognizing value trends in Tuscaloosa, Tuscaloosa County and surrounding areas, and we know when property values have risen or declined. Faced with information from an appraiser, the mortgage company will often do away with 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:
Cancellation of Private Mortgage Insurance: Federal Law May Save You Hundreds of Dollars Each Year

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