ASAP Appraisal Services, Inc. can help you remove your Private Mortgage Insurance
A 20% down payment is usually accepted when getting a mortgage. The lender's liability is generally only the difference between the home value and the amount remaining on the loan, so the 20% adds a nice buffer against the costs of foreclosure, reselling the home, and regular value variations in the event a purchaser doesn't pay.
During the recent mortgage boom of the last decade, it was common to see lenders requiring down payments of 10, 5 or sometimes 0 percent. How does a lender endure the additional risk of the low down payment? The solution is Private Mortgage Insurance or PMI. PMI covers the lender if a borrower defaults on the loan and the worth of the house is lower than what is owed on the loan.
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 many times isn't even tax deductible. It's favorable for the lender because they collect the money, and they get paid if the borrower is unable to pay, separate from 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 can homebuyers prevent bearing the expense of PMI?
With the implementation of The Homeowners Protection Act of 1998, on most loans lenders are required to automatically cancel the PMI when the principal balance of the loan reaches 78 percent of the primary 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 released when the principal amount equals only 80 percent.
It can take countless years to reach the point where the principal is just 20% of the initial amount borrowed, so it's necessary to know how your home has appreciated in value. After all, any appreciation you've achieved over the years counts towards dismissing PMI. So what's the reason for paying it after your loan balance has fallen below the 80% mark? Despite the fact that nationwide trends hint at plunging home values, realize that real estate is local. Your neighborhood might not be adhering to the national trends and/or your home might have gained equity before things simmered down.
A certified, licensed real estate appraiser can help homeowners understand just when their home's equity goes over the 20% point, as it's a difficult thing to know. It's an appraiser's job to recognize the market dynamics of their area. At ASAP Appraisal Services, Inc., we're masters at determining value trends in Mesa, Maricopa County and surrounding areas, and we know when property values have risen or declined. When faced with information from an appraiser, the mortgage company will generally cancel the PMI with little anxiety. At that time, the home owner can retain the savings from that point on.
Want to learn more about PMI and the Homeowners Protection Act? Click this link: