Conte Appraisal Group can help you remove your Private Mortgage Insurance
When getting a mortgage, a 20% down payment is typically the standard. Since the liability for the lender is oftentimes only the difference between the home value and the amount due on the loan, the 20% supplies a nice cushion against the expenses of foreclosure, selling the home again, and regular value fluctuationsin the event a borrower defaults.
The market was taking down payments down to 10, 5 and even 0 percent during the mortgage boom of the mid 2000s. How does a lender endure the increased risk of the small down payment? The solution is Private Mortgage Insurance or PMI. PMI guards the lender in case a borrower is unable to pay on the loan and the market price of the house is lower than the balance of the loan.
Because the $40-$50 a month per $100,000 borrowed is rolled into the mortgage payment and frequently isn't even tax deductible, PMI can be pricey to a borrower. Opposite from a piggyback loan where the lender consumes all the damages, PMI is lucrative for the lender because they obtain the money, and they get the money 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 can home buyers keep from bearing the cost of PMI?
With the employment 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 beginning loan amount. The law guarantees that, upon request of the home owner, the PMI must be dropped when the principal amount equals only 80 percent. So, smart homeowners can get off the hook ahead of time.
Because it can take many years to reach the point where the principal is just 20% of the original loan amount, it's crucial to know how your home has increased in value. After all, all of the appreciation you've acquired over the years counts towards removing PMI. So why pay it after the balance of your loan has dropped below the 80% threshold? Despite the fact that nationwide trends indicate declining home values, be aware that real estate is local. Your neighborhood may not be following the national trends and/or your home might have acquired equity before things simmered 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 tough thing to know. It's an appraiser's job to keep up with the market dynamics of their area. At Conte Appraisal Group, we know when property values have risen or declined. We're experts at recognizing value trends in CAROLINA SHORES, Brunswick County and surrounding areas. When faced with figures from an appraiser, the mortgage company will generally cancel the PMI with little trouble. At that time, the homeowner can delight in the savings from that point on.
Want to learn more about PMI and the Homeowners Protection Act? Click this link: