ASAP Appraisal Services, Inc. can help you remove your Private Mortgage Insurance
It's generally inferred that a 20% down payment is common when buying a house. The lender's risk is usually only the difference between the home value and the amount remaining on the loan, so the 20% supplies a nice buffer against the expenses of foreclosure, selling the home again, and regular value fluctuations on the chance that a purchaser is unable to pay.
The market was taking down payments down to 10, 5 and often 0 percent in the peak of last decade's mortgage boom. A lender is able to manage the increased risk of the minimal down payment with Private Mortgage Insurance or PMI. This additional plan protects the lender in case a borrower doesn't pay on the loan and the value of the property is lower than the loan balance.
Because the $40-$50 a month per $100,000 borrowed is rolled into the mortgage monthly payment and frequently isn't even tax deductible, PMI can be pricey to a borrower. It's lucrative for the lender because they obtain the money, and they receive payment if the borrower defaults, contradictory to a piggyback loan where the lender absorbs all the damages.
Does your monthly mortgage payment include PMI? Contact us, you may be able to save money by removing your PMI.
How buyers can prevent bearing the cost of PMI
The Homeowners Protection Act of 1998 obligates the lenders on nearly all loans to automatically eliminate the PMI when the principal balance of the loan equals 78 percent of the beginning loan amount. Keen homeowners can get off the hook a little early. The law states that, upon request of the home owner, the PMI must be released when the principal amount reaches just 80 percent.
It can take many years to arrive at the point where the principal is just 20% of the original loan amount, so it's crucial to know how your home has increased in value. After all, all of the appreciation you've gained over the years counts towards removing PMI. So why should you pay it after the balance of your loan has fallen below the 80% threshold? Your neighborhood might not be adhering to the national trends and/or your home might have acquired equity before things calmed down, so even when nationwide trends hint at falling home values, you should understand that real estate is local.
A certified, licensed real estate appraiser can help homeowners understand just when their home's equity rises above the 20% point, as it's a hard thing to know. It is an appraiser's job to recognize the market dynamics of their area. At ASAP Appraisal Services, Inc., we know when property values have risen or declined. We're experts at pinpointing value trends in Mesa, Maricopa County and surrounding areas. When faced with information from an appraiser, the mortgage company will generally drop the PMI with little effort. At which time, the home owner can delight in the savings from that point on.
Want to learn more about PMI and the Homeowners Protection Act? Click this link: