Columbus Appraisal Company, LLC can help you remove your Private Mortgage Insurance
A 20% down payment is usually accepted when purchasing a home. 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, reselling the home, and natural value changesin the event a purchaser doesn't pay.
During the recent mortgage upturn of the last decade, it became widespread to see lenders requiring down payments of 10, 5 or even 0 percent. How does a lender handle the additional risk of the small down payment? The answer is Private Mortgage Insurance or PMI. PMI guards the lender if a borrower is unable to pay on the loan and the worth of the home is lower than what is owed on the loan.
Because the $40-$50 a month per $100,000 borrowed is lumped into the mortgage payment and frequently isn't even tax deductible, PMI can be pricey to a borrower. Separate from a piggyback loan where the lender consumes all the costs, PMI is profitable for the lender because they secure the money, and they get the money if the borrower doesn't pay.
Does your monthly mortgage payment include PMI? Contact us, you may be able to save money by removing your PMI.
How can a buyer keep from bearing the cost of PMI?
The Homeowners Protection Act of 1998 forces the lenders on most loans to automatically cancel the PMI when the principal balance of the loan reaches 78 percent of the primary loan amount. Keen home owners can get off the hook sooner than expected. The law guarantees that, upon request of the home owner, the PMI must be dropped when the principal amount reaches just 80 percent.
It can take countless years to arrive at the point where the principal is only 20% of the initial loan amount, so it's important to know how your home has increased in value. After all, all of the appreciation you've achieved over time counts towards dismissing PMI. So what's the reason for paying it after the balance of your loan has dropped below the 80% mark? Even when nationwide trends indicate plummeting home values, realize that real estate is local. Your neighborhood may not be adopting the national trends and/or your home might have gained equity before things cooled off.
A certified, licensed real estate appraiser can help home owners understand just when their home's equity goes over the 20% point, as it's a tough thing to know. As appraisers, it's our job to keep up with the market dynamics of our area. At Columbus Appraisal Company, LLC, we know when property values have risen or declined. We're masters at recognizing value trends in Westerville, Franklin County and surrounding areas. When faced with data from an appraiser, the mortgage company will often drop the PMI with little effort. At which 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: