Valiant Appraisal Services can help determine if your PMI is ready to removed
It's generally inferred that a 20% down payment is accepted when buying a house. Since the liability for the lender is often only the difference between the home value and the amount remaining on the loan, the 20% provides a nice buffer against the charges of foreclosure, selling the home again, and natural value variations in the event a purchaser defaults.
During the recent mortgage upturn of the last decade, it was common to see lenders requiring down payments of 10, 5 or often 0 percent. A lender is able to manage the added risk of the minimal down payment with Private Mortgage Insurance or PMI. This added policy covers the lender in case a borrower defaults on the loan and the value of the property is lower than what is owed on the loan.
PMI can be expensive to a borrower on the grounds that the $40-$50 a month per $100,000 borrowed is compiled into the mortgage payment and oftentimes isn't even tax deductible. Opposite from a piggyback loan where the lender absorbs all the losses, PMI is money-making for the lender because they collect the money, and they get the money if the borrower is unable to pay.
Does your monthly mortgage payment include PMI? Contact us, you may be able to save money by removing your PMI.
How can buyers keep from bearing the expense of PMI?
With the utilization of The Homeowners Protection Act of 1998, on most loans lenders are forced to automatically stop the PMI when the principal balance of the loan equals 78 percent of the initial loan amount. Smart homeowners can get off the hook a little early. The law promises that, at the request of the homeowner, the PMI must be abandoned when the principal amount equals only 80 percent.
Because it can take countless years to arrive at the point where the principal is only 20% of the initial amount of the loan, it's crucial to know how your home has appreciated in value. After all, any appreciation you've obtained over time counts towards dismissing PMI. So what's the reason for paying it after your loan balance has dropped below the 80% threshold? Even when nationwide trends signify declining home values, realize that real estate is local. Your neighborhood may not be reflecting the national trends and/or your home might have gained equity before things settled down.
An accredited, licensed real estate appraiser can help homeowners understand just when their home's equity rises above the 20% point, as it's a difficult thing to know. As appraisers, it's our job to understand the market dynamics of our area. At Valiant Appraisal Services, we're experts at analyzing value trends in Philadelphia and the surrounding suburbs, and we know when property values have risen or declined. Faced with figures from an appraiser, the mortgage company will often remove the PMI with little anxiety. At which 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: