Appraise Colorado Inc can help you remove your Private Mortgage Insurance
When purchasing a home, a 20% down payment is typically the standard. The lender's liability is often only the remainder between the home value and the amount outstanding on the loan, so the 20% supplies a nice cushion against the charges of foreclosure, selling the home again, and natural value fluctuations on the chance that a borrower doesn't pay.
The market was working with down payments as low as 10, 5 and often 0 percent during the mortgage boom of the last decade. A lender is able to handle the added risk of the low down payment with Private Mortgage Insurance or PMI. This supplemental policy takes care of the lender in the event a borrower doesn't pay on the loan and the worth of the house is less than the loan balance.
Because the $40-$50 a month per $100,000 borrowed is bundled into the mortgage payment and generally isn't even tax deductible, PMI can be pricey to a borrower. Contradictory to a piggyback loan where the lender absorbs all the losses, PMI is favorable for the lender because they obtain the money, and they receive payment if the borrower defaults.
Does your monthly mortgage payment include PMI? Contact us, you may be able to save money by removing your PMI.
How homeowners can avoid paying PMI
The Homeowners Protection Act of 1998 makes the lenders on nearly all loans to automatically cease the PMI when the principal balance of the loan equals 78 percent of the beginning loan amount. Savvy home owners can get off the hook a little earlier. The law promises that, upon request of the homeowner, the PMI must be dropped when the principal amount reaches just 80 percent.
Since it can take countless years to get to the point where the principal is only 20% of the initial amount borrowed, it's essential to know how your home has appreciated in value. After all, any appreciation you've gained over time counts towards removing PMI. So why should you pay it after the balance of your loan has fallen below the 80% threshold? Even when nationwide trends forecast plummeting home values, be aware that real estate is local. Your neighborhood might not be following the national trends and/or your home could have acquired equity before things simmered down.
An accredited, licensed real estate appraiser can help homeowners understand just when their home's equity goes over the 20% point, as it's a hard thing to know. It is an appraiser's job to understand the market dynamics of their area. At Appraise Colorado Inc, we know when property values have risen or declined. We're experts at recognizing value trends in Parker, Arapahoe County and surrounding areas. When faced with data from an appraiser, the mortgage company will usually remove the PMI with little effort. At that 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: