Have equity in your home? Want a lower payment? An appraisal from All State Appraisal Partners, Inc. can help you get rid of your PMI.A 20% down payment is usually accepted when getting a mortgage. The lender's only liability is generally just the remainder between the home value and the balance remaining on the loan, so the 20% adds a nice cushion against the charges of foreclosure, reselling the home, and natural value variations in the event a purchaser is unable to pay.Banks were taking down payments dropping to 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 reduced down payment with Private Mortgage Insurance or PMI. PMI takes care of the lender in case a borrower defaults on the loan and the value of the home is lower than the balance of the loan. PMI is pricey to a borrower in that the $40-$50 a month per $100,000 borrowed is lumped into the mortgage payment and many times isn't even tax deductible. It's profitable for the lender because they obtain the money, and they get the money if the borrower doesn't pay, in contrast to a piggyback loan where the lender consumes all the deficits.
How can homeowners refrain from bearing the expense of PMI?With the implementation of The Homeowners Protection Act of 1998, lenders are forced to automatically cancel the PMI when the principal balance of the loan reaches 78 percent of the initial loan amount on most loans. Smart home owners can get off the hook a little earlier. The law guarantees that, at the request of the homeowner, the PMI must be abandoned when the principal amount reaches only 80 percent.Considering it can take several years to reach the point where the principal is just 80% of the initial amount of the loan, it's important to know how your North Carolina home has grown in value. After all, every bit of appreciation you've gained over the years counts towards removing PMI. So what's the reason for paying it after the balance of your loan has dropped below the 80% threshold? Even when nationwide trends predict lower overall home values, realize that real estate is local. Your neighborhood may not be reflecting the national trends and/or your home could have gained equity before things simmered down. The difficult thing for most people to figure out is whether their home equity has exceeded the 20% point. A certified, North Carolina licensed real estate appraiser can definitely help. As appraisers, it's our job to know the market dynamics of our area. At All State Appraisal Partners, Inc., we know when property values have risen or declined. We're masters at determining value trends in Mooresville, Iredell County, and surrounding areas. Faced with figures from an appraiser, the mortgage company will usually drop the PMI with little effort. At that time, the home owner can enjoy 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
|
||||||||||||||||||
