Have equity in your home? Want a lower payment? An appraisal from Powers Real Estate Services, LLC can help you get rid of your PMI.
When buying a house, a 20% down payment is typically the standard. The lender's risk is usually only the difference between the home value and the amount due on the loan, so the 20% supplies a nice cushion against the expenses of foreclosure, reselling the home, and natural value changes in the event a borrower is unable to pay.
The market was accepting down payments down to 10, 5 and often 0 percent during the mortgage boom of the mid 2000s. A lender is able to manage the increased risk of the minimal down payment with Private Mortgage Insurance or PMI. PMI takes care of the lender in the event a borrower defaults on the loan and the worth of the house is lower than the loan balance.
Because the $40-$50 a month per $100,000 borrowed is lumped into the mortgage monthly payment and oftentimes isn't even tax deductible, PMI is pricey to a borrower. It's profitable for the lender because they obtain the money, and they get the money if the borrower defaults, different from a piggyback loan where the lender consumes all the costs.
Does your monthly mortgage payment include PMI? Contact us, you may be able to save money by removing your PMI.
How homebuyers 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 eliminate the PMI when the principal balance of the loan equals 78 percent of the initial loan amount. Acute home owners can get off the hook a little early. The law pledges that, upon request of the home owner, the PMI must be released when the principal amount reaches only 80 percent.
It can take many years to arrive at the point where the principal is just 20% of the initial loan amount, so it's crucial to know how your home has increased in value. After all, every bit of appreciation you've obtained over the years counts towards abolishing PMI. So why pay it after your loan balance has fallen below the 80% threshold? Even when nationwide trends predict decreasing home values, understand that real estate is local. Your neighborhood might not be adopting the national trends and/or your home might have acquired equity before things settled down.
An accredited, licensed real estate appraiser can help home owners understand just when their home's equity rises above the 20% point, as it's a difficult thing to know. It is an appraiser's job to understand the market dynamics of their area. At Powers Real Estate Services, LLC, we know when property values have risen or declined. We're experts at analyzing value trends in San Tan Valley, Pinal County and surrounding areas. Faced with figures from an appraiser, the mortgage company will most often cancel the PMI with little effort. At which time, the home owner can retain the savings from that point on.
Want to learn more about PMI and the Homeowners Protection Act? Click this link: