MANDERFIELD APPRAISAL GROUP can help you remove your Private Mortgage Insurance
A 20% down payment is usually accepted when getting a mortgage. Since the risk for the lender is often only the remainder between the home value and the amount outstanding on the loan, the 20% adds a nice cushion against the charges of foreclosure, selling the home again, and typical value variationson the chance that a borrower is unable to pay.
The market was working with down payments as low as 10, 5 and often 0 percent during the mortgage boom of the mid 2000s. A lender is able to endure the additional risk of the reduced down payment with Private Mortgage Insurance or PMI. This supplementary plan guards the lender in the event a borrower defaults 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 on the grounds that the $40-$50 a month per $100,000 borrowed is bundled into the mortgage monthly payment and generally isn't even tax deductible. It's lucrative for the lender because they secure the money, and they get paid if the borrower is unable to pay, separate from a piggyback loan where the lender absorbs all the costs.
Does your monthly mortgage payment include PMI? Contact us, you may be able to save money by removing your PMI.
How can home owners prevent bearing the cost of PMI?
With the implementation of The Homeowners Protection Act of 1998, on most loans lenders are required to automatically eliminate the PMI when the principal balance of the loan equals 78 percent of the primary loan amount. Wise homeowners can get off the hook a little earlier. The law states that, upon request of the homeowner, 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 20% of the original amount of the loan, it's essential to know how your home has appreciated in value. After all, any appreciation you've obtained over time counts towards abolishing PMI. So what's the reason for paying it after your loan balance has fallen below the 80% threshold? Even when nationwide trends signify falling home values, understand that real estate is local. Your neighborhood might not be minding the national trends and/or your home might have secured equity before things simmered down.
The difficult thing for almost all homeowners to know is just when their home's equity goes over the 20% point. A certified, licensed real estate appraiser can certainly help. It's an appraiser's job to keep up with the market dynamics of their area. At MANDERFIELD APPRAISAL GROUP, we're experts at identifying value trends in Alexandria, Alexandria City County and surrounding areas, and we know when property values have risen or declined. Faced with figures from an appraiser, the mortgage company will usually eliminate the PMI with little anxiety. At which time, the homeowner can delight in the savings from that point on.
Want to learn more about PMI and the Homeowners Protection Act? Click this link: