Appraise Colorado Inc can help you remove your Private Mortgage Insurance
A 20% down payment is typically the standard when purchasing a home. The lender's risk is usually only the difference between the home value and the amount due on the loan, so the 20% supplies a nice cushion against the charges of foreclosure, reselling the home, and regular value variations in the event a borrower defaults.
During the recent mortgage upturn of the mid 2000s, it was customary to see lenders taking down payments of 10, 5 or often 0 percent. How does a lender endure the added risk of the small down payment? The answer is Private Mortgage Insurance or PMI. This supplemental policy takes care of the lender if a borrower is unable to pay on the loan and the worth of the home is less than what is owed on the loan.
PMI can be pricey to a borrower in that the $40-$50 a month per $100,000 borrowed is compiled into the mortgage payment and many times isn't even tax deductible. It's favorable for the lender because they secure the money, and they get the money if the borrower is unable to pay, contradictory to a piggyback loan where the lender takes in all the deficits.
Does your monthly mortgage payment include PMI? Contact us, you may be able to save money by removing your PMI.
How can a buyer keep from bearing the expense of PMI?
With the utilization of The Homeowners Protection Act of 1998, on most loans lenders are obligated to automatically cease the PMI when the principal balance of the loan reaches 78 percent of the initial loan amount. Savvy home owners can get off the hook beforehand. The law promises that, upon request of the home owner, the PMI must be abandoned when the principal amount equals just 80 percent.
Because it can take many years to get to the point where the principal is only 20% of the initial amount borrowed, it's important to know how your home has increased in value. After all, all of the appreciation you've achieved over the years counts towards dismissing PMI. So why pay it after your loan balance has fallen below the 80% threshold? Despite the fact that nationwide trends forecast plunging 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 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. An accredited, licensed real estate appraiser can definitely help. It's an appraiser's job to understand the market dynamics of their area. At Appraise Colorado Inc, we're experts at analyzing value trends in Parker, Adams 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 most often do away with the PMI with little trouble. 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: