Have equity in your home? Want a lower payment? An appraisal from Blake Appraisal Corp. can help you get rid of your PMI.A 20% down payment is usually the standard when getting a mortgage. The lender's only exposure is generally just the difference between the home value and the amount remaining on the loan, so the 20% adds a nice cushion against the expenses of foreclosure, reselling the home, and regular value variations on the chance that a purchaser defaults.During the recent mortgage boom that our country recently experienced, it was customary to see lenders only asking for down payments of 10, 5, 3 or even 0 percent. How does a lender manage the additional risk of the small down payment? The solution is Private Mortgage Insurance or PMI. This supplemental plan protects the lender in the event a borrower defaults on the loan and the market price of the house is less 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 takes in all the damages, PMI is profitable for the lender because they acquire the money, and they receive payment if the borrower defaults.
How homeowners can keep from paying PMIWith the passage of The Homeowners Protection Act of 1998, lenders are forced to automatically terminate the PMI when the principal balance of the loan equals 78 percent of the beginning loan amount on most loans. Wise home owners can get off the hook a little early. The law guarantees that, upon request of the home owner, the PMI must be released when the principal amount reaches only 80 percent.Since it can take many years to get to the point where the principal is just 80% of the original amount borrowed, it's important to know how your Michigan home has appreciated in value. After all, every bit of appreciation you've obtained over time counts towards dismissing PMI. So why pay it after the balance of your loan has dropped below the 80% mark? Your neighborhood might not adhere to national trends and/or your home might have acquired equity before the economy cooled off. So even when nationwide trends indicate a reduction in home values, you should realize that real estate is local. The difficult thing for almost all homeowners to determine is just when their home's equity rises above the 20% point. An accredited, Michigan licensed real estate appraiser can surely help. It's an appraiser's job to know the market dynamics of their area. At Blake Appraisal Corp., we're masters at recognizing value trends in Berkley, Oakland County, and surrounding areas, and we know when property values have risen or declined. When faced with figures from an appraiser, the mortgage company will most often cancel the PMI with little effort. At that time, the home owner 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
|
||||||||||||||||||
