Have equity in your home? Want a lower payment? An appraisal from Maine Home Appraisals, Inc can help you get rid of your PMI.
A 20% down payment is usually accepted when getting a mortgage. Considering the liability for the lender is often only the difference between the home value and the sum due on the loan, the 20% supplies a nice buffer against the expenses of foreclosure, reselling the home, and natural value changeson the chance that a purchaser defaults.
During the recent mortgage upturn of the last decade, it became customary to see lenders requiring down payments of 10, 5 or sometimes 0 percent. A lender is able to handle the additional risk of the minimal down payment with Private Mortgage Insurance or PMI. PMI covers the lender in the event a borrower is unable to pay on the loan and the market price of the property is less than what is owed on the loan.
PMI can be pricey to a borrower because the $40-$50 a month per $100,000 borrowed is rolled into the mortgage monthly payment and generally isn't even tax deductible. Unlike a piggyback loan where the lender takes in all the deficits, PMI is favorable for the lender because they collect the money, and they receive payment if the borrower is unable to pay.
Does your monthly mortgage payment include PMI? Contact us, you may be able to save money by removing your PMI.
How home owners can refrain from bearing the expense of PMI
With the utilization of The Homeowners Protection Act of 1998, on nearly all loans lenders are obligated to automatically cancel the PMI when the principal balance of the loan equals 78 percent of the beginning loan amount. The law states that, upon request of the home owner, the PMI must be abandoned when the principal amount reaches only 80 percent. So, wise 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 amount of the loan, it's important to know how your home has grown in value. After all, all of the appreciation you've achieved over the years counts towards dismissing PMI. So why pay it after the balance of your loan has fallen below the 80% mark? Your neighborhood may not be following the national trends and/or your home may have secured equity before things calmed down, so even when nationwide trends hint at declining home values, you should realize that real estate is local.
The difficult thing for many homeowners to know is just when their home's equity goes over the 20% point. An accredited, licensed real estate appraiser can certainly help. As appraisers, it's our job to recognize the market dynamics of our area. At Maine Home Appraisals, Inc, we're masters at pinpointing value trends in Casco, Cumberland County and surrounding areas, and we know when property values have risen or declined. Faced with information from an appraiser, the mortgage company will usually do away with the PMI with little anxiety. At that 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: