Have equity in your home? Want a lower payment? An appraisal from Appraise Colorado Inc can help you get rid of your PMI.
A 20% down payment is usually the standard when buying a house. The lender's liability is usually only the remainder between the home value and the sum outstanding on the loan, so the 20% provides a nice buffer against the costs of foreclosure, reselling the home, and typical value variations in the event a purchaser defaults.
During the recent mortgage upturn of the mid 2000s, it was customary to see lenders commanding down payments of 10, 5 or often 0 percent. A lender is able to handle the added risk of the minimal down payment with Private Mortgage Insurance or PMI. PMI guards the lender if a borrower doesn't pay on the loan and the value of the home is lower than the balance of the loan.
PMI is costly to a borrower in that the $40-$50 a month per $100,000 borrowed is compiled into the mortgage payment and frequently isn't even tax deductible. It's lucrative for the lender because they secure the money, and they receive payment if the borrower doesn't pay, contradictory to a piggyback loan where the lender absorbs all the losses.
Does your monthly mortgage payment include PMI? Contact us, you may be able to save money by removing your PMI.
How can homebuyers refrain from bearing the expense of PMI?
With the utilization of The Homeowners Protection Act of 1998, on nearly all loans lenders are required to automatically cease the PMI when the principal balance of the loan equals 78 percent of the original loan amount. Acute homeowners can get off the hook ahead of time. The law pledges that, at the request of the homeowner, the PMI must be dropped when the principal amount reaches only 80 percent.
It can take countless years to reach the point where the principal is just 20% of the initial amount of the loan, so it's crucial to know how your home has appreciated in value. After all, all of the appreciation you've obtained over the years counts towards dismissing PMI. So why should you pay it after your loan balance has fallen below the 80% threshold? Your neighborhood may not be heeding the national trends and/or your home might have acquired equity before things calmed down, so even when nationwide trends signify plummeting 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 goes over the 20% point, as it's a hard thing to know. As appraisers, it's our job to know the market dynamics of our area. At Appraise Colorado Inc, we know when property values have risen or declined. We're masters at identifying value trends in Parker, Douglas County and surrounding areas. Faced with figures from an appraiser, the mortgage company will generally cancel the PMI with little anxiety. At that time, the homeowner can enjoy the savings from that point on.
Want to learn more about PMI and the Homeowners Protection Act? Click this link: