Have equity in your home? Want a lower payment? An appraisal from Accurate Valuation LLC can help you get rid of your PMI.It's generally understood that a 20% down payment is common when buying a house. Because the liability for the lender is usually only the remainder between the home value and the amount remaining on the loan, the 20% supplies a nice buffer against the charges of foreclosure, reselling the home, and natural value changeson the chance that a purchaser doesn't pay. During the recent mortgage boom of the mid 2000s, it became customary to see lenders commanding down payments of 10, 5 or even 0 percent. How does a lender handle the added risk of the small down payment? The answer is Private Mortgage Insurance or PMI. PMI protects the lender if a borrower defaults on the loan and the market price of the home is less than the loan balance. Because the $40-$50 a month per $100,000 borrowed is lumped into the mortgage payment and oftentimes isn't even tax deductible, PMI is costly to a borrower. It's beneficial for the lender because they acquire the money, and they get the money if the borrower defaults, separate from a piggyback loan where the lender consumes all the losses. Does your monthly mortgage payment include PMI? Contact us, you may be able to save money by removing your PMI. How can a home owner 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 terminate the PMI when the principal balance of the loan equals 78 percent of the original loan amount. Savvy home owners can get off the hook a little early. The law promises that, upon request of the home owner, the PMI must be abandoned when the principal amount equals only 80 percent. It can take countless years to arrive at the point where the principal is just 20% of the initial amount borrowed, so it's essential to know how your home has grown in value. After all, any appreciation you've obtained over the years counts towards dismissing PMI. So what's the reason for paying it after your loan balance has fallen below the 80% mark? Your neighborhood may not be reflecting the national trends and/or your home might have gained equity before things simmered down, so even when nationwide trends indicate declining home values, you should understand that real estate is local. A certified, licensed real estate appraiser can help home owners 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 know the market dynamics of their area. At Accurate Valuation LLC, we know when property values have risen or declined. We're masters at determining value trends in Wellington, Larimer County and surrounding areas. Faced with data from an appraiser, the mortgage company will usually do away with the PMI with little anxiety. At which time, the homeowner can retain the savings from that point on.
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