Let American Appraisal, Inc. help you decide if you can get rid of your PMIIt's typically known that a 20% down payment is the standard when purchasing a home. The lender's liability is oftentimes only the difference between the home value and the sum due on the loan, so the 20% supplies a nice cushion against the charges of foreclosure, reselling the home, and typical value variations in the event a purchaser doesn't 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. How does a lender handle the added risk of the small down payment? The answer is Private Mortgage Insurance or PMI. PMI takes care of the lender in the event a borrower doesn't pay on the loan and the market price of the home is less than the balance of the loan. PMI can be pricey to a borrower on the grounds that the $40-$50 a month per $100,000 borrowed is rolled into the mortgage monthly payment and oftentimes isn't even tax deductible. Different from a piggyback loan where the lender consumes all the losses, PMI is favorable for the lender because they acquire the money, and they receive payment if the borrower is unable to pay. 
Does your monthly mortgage payment include PMI? Contact us, you may be able to save money by removing your PMI. How can a home buyer refrain from paying PMI?The Homeowners Protection Act of 1998 obligates the lenders on nearly all loans to automatically eliminate the PMI when the principal balance of the loan equals 78 percent of the initial loan amount. Smart home owners can get off the hook sooner than expected. The law stipulates that, upon request of the home owner, the PMI must be dropped when the principal amount equals only 80 percent. Since it can take many years to reach the point where the principal is just 20% of the original amount borrowed, it's essential to know how your home has grown in value. After all, any appreciation you've acquired over the years counts towards dismissing PMI. So why pay it after your loan balance has dropped below the 80% mark? Your neighborhood might not be adopting the national trends and/or your home might have acquired equity before things cooled off, so even when nationwide trends indicate decreasing home values, you should realize that real estate is local. An accredited, licensed real estate appraiser can help homeowners understand just when their home's equity rises above the 20% point, as it's a tough thing to know. It's an appraiser's job to keep up with the market dynamics of their area. At American Appraisal, Inc., we know when property values have risen or declined. We're masters at recognizing value trends in Bakersfield, Kern County and surrounding areas. When faced with data from an appraiser, the mortgage company will most often do away with the PMI with little effort. At which time, the home owner can relish the savings from that point on.
Want to learn more about PMI and the Homeowners Protection Act? Click this link: |