Have equity in your home? Want a lower payment? An appraisal from Advance Appraisal and Consultant Inc. can help you get rid of your PMI.When purchasing a home, a 20% down payment is usually the standard. Considering the risk for the lender is often only the difference between the home value and the amount remaining on the loan, the 20% supplies a nice cushion against the expenses of foreclosure, selling the home again, and natural value changes on the chance that a borrower is unable to pay.The market was accepting down payments as low as 10, 5 and often 0 percent in the peak of last decade's mortgage boom. A lender is able to endure the increased risk of the reduced down payment with Private Mortgage Insurance or PMI. This supplementary plan takes care of the lender in case a borrower doesn't pay on the loan and the market price of the property is lower than what the borrower still owes on the loan. Because the $40-$50 a month per $100,000 borrowed is lumped into the mortgage payment and on many occasions isn't even tax deductible, PMI can be pricey to a borrower. Separate from a piggyback loan where the lender consumes all the losses, PMI is profitable for the lender because they acquire the money, and they receive payment if the borrower defaults.
How homeowners can refrain from bearing the cost of PMIThe Homeowners Protection Act of 1998 requires the lenders on nearly all loans to automatically stop the PMI when the principal balance of the loan equals 78 percent of the beginning loan amount. The law promises that, upon request of the home owner, the PMI must be dropped when the principal amount reaches just 80 percent. So, acute homeowners can get off the hook sooner than expected.Since it can take many years to arrive at the point where the principal is just 80% of the original loan amount, it's necessary to know how your Alabama home has appreciated in value. After all, any appreciation you've gained over time counts towards dismissing PMI. So why should you pay it after your loan balance has dropped below the 80% threshold? Even when nationwide trends indicate decreasing home values, understand that real estate is local. Your neighborhood might not be adopting the national trends and/or your home might have secured equity before things simmered down. An accredited, Alabama licensed real estate appraiser can help home owners figure out if their equity has reached the 20% point, as it's a hard thing to know. Market dynamics and neighborhood-specific pricing trends are an appraiser's primary job! At Advance Appraisal and Consultant Inc., we're masters at identifying value trends in Mobile, Mobile County, and surrounding areas, and we know when property values have risen or declined. Faced with figures from an appraiser, the mortgage company will usually remove the PMI with little trouble. At that time, the homeowner can relish the savings from that point on.
Want to learn more about PMI and the Homeowners Protection Act? Click this link: Cancellation of Private Mortgage Insurance: Federal Law May Save You Hundreds of Dollars Each Year
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