Have equity in your home? Want a lower payment? An appraisal from ASAP Appraisal Services, Inc. can help you get rid of your PMI.
It's generally inferred that a 20% down payment is the standard when getting a mortgage. Considering the risk for the lender is usually only the remainder between the home value and the amount outstanding on the loan, the 20% supplies a nice buffer against the charges of foreclosure, selling the home again, and typical value fluctuationsin the event a borrower defaults.
The market was taking 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 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 market price of the property is lower than the balance of the loan.
PMI is pricey to a borrower on the grounds that the $40-$50 a month per $100,000 borrowed is compiled into the mortgage monthly payment and generally isn't even tax deductible. It's advantageous for the lender because they secure the money, and they get the money if the borrower defaults, separate from a piggyback loan where the lender absorbs all the costs.
Does your monthly mortgage payment include PMI? Contact us, you may be able to save money by removing your PMI.
How can home buyers refrain from paying PMI?
The Homeowners Protection Act of 1998 forces the lenders on most loans to automatically cancel the PMI when the principal balance of the loan equals 78 percent of the primary loan amount. The law designates that, at the request of the home owner, the PMI must be abandoned when the principal amount equals just 80 percent. So, keen home owners can get off the hook ahead of time.
It can take many years to arrive at the point where the principal is only 20% of the original loan amount, so it's important to know how your home has appreciated in value. After all, all of the appreciation you've acquired over the years counts towards abolishing PMI. So why pay it after your loan balance has dropped below the 80% threshold? Even when nationwide trends predict falling home values, realize that real estate is local. Your neighborhood may not be adhering to the national trends and/or your home may have gained equity before things simmered down.
The hardest thing for many homeowners to know is just when their home's equity rises above the 20% point. A certified, licensed real estate appraiser can certainly help. It's an appraiser's job to know the market dynamics of their area. At ASAP Appraisal Services, Inc., we know when property values have risen or declined. We're masters at recognizing value trends in Mesa, Maricopa County and surrounding areas. When faced with figures from an appraiser, the mortgage company will most often drop the PMI with little effort. At that time, the homeowner can relish the savings from that point on.
Want to learn more about PMI and the Homeowners Protection Act? Click this link: