Let C.D. McCullough Real Estate Appraisal help you discover if you can get rid of your PMI
When purchasing a home, a 20% down payment is typically the standard. Considering the risk for the lender is generally only the remainder between the home value and the amount due on the loan, the 20% provides a nice buffer against the costs of foreclosure, reselling the home, and regular value fluctuationsin the event a purchaser doesn't pay.
The market was taking down payments down to 10, 5 and often 0 percent in the peak of last decade's mortgage boom. A lender is able to manage the increased risk of the minimal down payment with Private Mortgage Insurance or PMI. This added plan guards the lender in the event a borrower defaults on the loan and the worth of the house is lower than what the borrower still owes on the loan.
Since the $40-$50 a month per $100,000 borrowed is rolled into the mortgage monthly payment and oftentimes isn't even tax deductible, PMI is pricey to a borrower. Different from a piggyback loan where the lender takes in all the losses, PMI is lucrative for the lender because they collect the money, and they get the money if the borrower doesn't pay.
Does your monthly mortgage payment include PMI? Contact us, you may be able to save money by removing your PMI.
How can home buyers refrain from bearing the expense of PMI?
The Homeowners Protection Act of 1998 obligates the lenders on most loans to automatically cease the PMI when the principal balance of the loan equals 78 percent of the beginning loan amount. The law guarantees that, upon request of the home owner, the PMI must be dropped when the principal amount reaches only 80 percent. So, keen homeowners can get off the hook a little earlier.
Because it can take many years to get to the point where the principal is only 20% of the initial loan amount, it's crucial to know how your home has appreciated in value. After all, any appreciation you've acquired over the years counts towards abolishing PMI. So why pay it after the balance of your loan has dropped below the 80% mark? Your neighborhood may not be following the national trends and/or your home could have secured equity before things cooled off, so even when nationwide trends signify plummeting home values, you should realize that real estate is local.
An accredited, licensed real estate appraiser can help home owners understand just when their home's equity goes over the 20% point, as it's a hard thing to know. It's an appraiser's job to keep up with the market dynamics of their area. At C.D. McCullough Real Estate Appraisal, we know when property values have risen or declined. We're experts at pinpointing value trends in Colton, San Bernardino County and surrounding areas. When faced with information from an appraiser, the mortgage company will most often eliminate the PMI with little anxiety. At that 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:
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