Have equity in your home? Want a lower payment? An appraisal from Jamison Appraisal Services can help you get rid of your PMI.It's widely known that a 20% down payment is accepted when purchasing a home. The lender's liability is generally only the remainder between the home value and the balance remaining on the loan, so the 20% supplies a nice buffer against the charges of foreclosure, reselling the home, and typical value fluctuations in the event a purchaser doesn't pay.Banks were taking down payments as low as 10, 5 and frequently 0 percent during the mortgage boom of the mid 2000s. How does a lender manage the additional risk of the small down payment? The answer is Private Mortgage Insurance or PMI. This supplementary plan protects the lender in the event a borrower doesn't pay on the loan and the market price of the property is lower than what is owed on the loan. Because the $40-$50 a month per $100,000 borrowed is rolled into the mortgage monthly payment and often isn't even tax deductible, PMI can be expensive to a borrower. It's favorable for the lender because they obtain the money, and they receive payment if the borrower doesn't pay, in contrast to a piggyback loan where the lender takes in all the damages.
How home buyers can avoid bearing the expense of PMIWith the implementation of The Homeowners Protection Act of 1998, lenders are forced to automatically cease the PMI when the principal balance of the loan equals 78 percent of the initial loan amount on nearly all loans. Wise homeowners can get off the hook a little early. The law designates that, upon request of the homeowner, the PMI must be dropped when the principal amount equals just 80 percent.Considering it can take many years to get to the point where the principal is just 80% of the original amount of the loan, it's essential to know how your Pennsylvania home has grown in value. After all, any appreciation you've gained 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 signify declining home values, realize that real estate is local. Your neighborhood may not be heeding the national trends and/or your home may have acquired equity before things simmered down. The difficult thing for many people to figure out is just when their home's equity goes over the 20% point. An accredited, Pennsylvania licensed real estate appraiser can definitely help. It is an appraiser's job to recognize the market dynamics of their area. At Jamison Appraisal Services, we know when property values have risen or declined. We're experts at pinpointing value trends in Wyomissing, Berks County, and surrounding areas. When faced with data from an appraiser, the mortgage company will generally do away with the PMI with little effort. At which time, the home owner can enjoy the savings from that point on.
Want to learn more about PMI and the Homeowners Protection Act? Click this link: Cancellation of Private Mortgage Insurance: Federal Law May Save You Hundreds of Dollars Each Year
|
||||||||||||||||||
