James Earp Appraisal Service can help you remove your Private Mortgage Insurance
When buying a house, a 20% down payment is usually the standard. Because the liability for the lender is usually only the remainder between the home value and the sum remaining on the loan, the 20% provides a nice buffer against the charges of foreclosure, reselling the home, and typical value fluctuationson the chance that a borrower defaults.
Banks were 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 added risk of the minimal down payment with Private Mortgage Insurance or PMI. This added policy covers the lender if a borrower defaults on the loan and the market price of the house is less than the balance of the loan.
PMI is costly to a borrower on the grounds that the $40-$50 a month per $100,000 borrowed is lumped into the mortgage payment and often isn't even tax deductible. It's beneficial for the lender because they obtain the money, and they get the money if the borrower is unable to pay, separate from a piggyback loan where the lender absorbs all the costs.
Does your monthly mortgage payment include PMI? Contact us, you may be able to save money by removing your PMI.
How can a home owner keep from paying PMI?
The Homeowners Protection Act of 1998 obligates the lenders on most loans to automatically cease the PMI when the principal balance of the loan reaches 78 percent of the primary loan amount. The law promises that, upon request of the homeowner, the PMI must be released when the principal amount reaches just 80 percent. So, wise homeowners can get off the hook a little earlier.
It can take many years to reach the point where the principal is just 20% of the initial amount borrowed, so it's essential to know how your home has appreciated in value. After all, all of the appreciation you've accomplished over time counts towards abolishing PMI. So why should you pay it after the balance of your loan has fallen below the 80% threshold? Despite the fact that nationwide trends indicate plummeting home values, understand that real estate is local. Your neighborhood might not be adhering to the national trends and/or your home could have secured 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. It is an appraiser's job to understand the market dynamics of their area. At James Earp Appraisal Service, we know when property values have risen or declined. We're experts at pinpointing value trends in Raleigh, Wake County and surrounding areas. Faced with figures from an appraiser, the mortgage company will usually cancel the PMI with little anxiety. 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: