Powers Real Estate Services, LLC can help you remove your Private Mortgage Insurance
A 20% down payment is usually accepted when purchasing a home. Because the liability for the lender is oftentimes only the difference between the home value and the amount due on the loan, the 20% supplies a nice cushion against the expenses of foreclosure, reselling the home, and regular value changeson the chance that a borrower doesn't pay.
During the recent mortgage upturn of the mid 2000s, it was common to see lenders taking down payments of 10, 5 or sometimes 0 percent. A lender is able to endure the increased risk of the low down payment with Private Mortgage Insurance or PMI. This additional policy covers the lender in case a borrower is unable to pay on the loan and the worth of the property is less than the loan balance.
PMI can be expensive to a borrower on the grounds that the $40-$50 a month per $100,000 borrowed is rolled into the mortgage monthly payment and often isn't even tax deductible. It's money-making for the lender because they obtain the money, and they receive payment if the borrower doesn't pay, contradictory to 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 prevent paying PMI?
With the employment of The Homeowners Protection Act of 1998, on nearly all loans lenders are required to automatically eliminate the PMI when the principal balance of the loan reaches 78 percent of the initial loan amount. Acute home owners can get off the hook ahead of time. The law stipulates that, upon request of the home owner, the PMI must be released when the principal amount reaches just 80 percent.
Considering it can take countless years to get to the point where the principal is just 20% of the initial amount borrowed, it's necessary to know how your home has appreciated in value. After all, any appreciation you've achieved over the years counts towards abolishing PMI. So what's the reason for paying it after the balance of your loan has fallen below the 80% threshold? Despite the fact that nationwide trends predict decreasing home values, be aware that real estate is local. Your neighborhood may not be adhering to the national trends and/or your home could have secured equity before things simmered down.
The difficult thing for most home owners to understand is just when their home's equity goes over the 20% point. An accredited, licensed real estate appraiser can definitely help. It's an appraiser's job to know the market dynamics of their area. At Powers Real Estate Services, LLC, we know when property values have risen or declined. We're masters at determining value trends in San Tan Valley, Pinal County and surrounding areas. Faced with information from an appraiser, the mortgage company will generally remove the PMI with little effort. At which time, the home owner can delight in the savings from that point on.
Want to learn more about PMI and the Homeowners Protection Act? Click this link: