James Earp Appraisal Service can help you remove your Private Mortgage InsuranceWhen getting a mortgage, a 20% down payment is usually the standard. The lender's liability is usually only the remainder between the home value and the amount remaining on the loan, so the 20% supplies a nice cushion against the costs of foreclosure, reselling the home, and typical value changes on the chance that a borrower defaults. The market was working with down payments as low as 10, 5 and even 0 percent in the peak of last decade's mortgage boom. How does a lender handle the additional risk of the low down payment? The solution is Private Mortgage Insurance or PMI. This supplemental policy covers the lender in the event a borrower defaults on the loan and the value of the property is lower than the balance of the loan. PMI is pricey to a borrower on the grounds that the $40-$50 a month per $100,000 borrowed is lumped into the mortgage payment and many times isn't even tax deductible. Unlike a piggyback loan where the lender consumes all the losses, PMI is beneficial for the lender because they obtain the money, and they get paid if the borrower defaults. 
Does your monthly mortgage payment include PMI? Contact us, you may be able to save money by removing your PMI. How homebuyers can avoid bearing the cost of PMIThe Homeowners Protection Act of 1998 requires the lenders on most loans to automatically terminate the PMI when the principal balance of the loan reaches 78 percent of the original loan amount. Acute homeowners can get off the hook a little early. The law pledges that, at the request of the home owner, the PMI must be released when the principal amount reaches only 80 percent. It can take many years to get to the point where the principal is just 20% of the original amount of the loan, so it's necessary to know how your home has increased in value. After all, all of the appreciation you've achieved over time counts towards removing PMI. So why should you pay it after your loan balance has dropped below the 80% mark? Despite the fact that nationwide trends forecast falling home values, realize that real estate is local. Your neighborhood may not be reflecting the national trends and/or your home could have secured equity before things simmered down. A certified, licensed real estate appraiser can help home owners understand just when their home's equity rises above the 20% point, as it's a difficult thing to know. It is an appraiser's job to recognize the market dynamics of their area. At James Earp Appraisal Service, we know when property values have risen or declined. We're experts at identifying value trends in Raleigh, Wake County and surrounding areas. Faced with figures from an appraiser, the mortgage company will generally remove the PMI with little anxiety. At which 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: |