Ihns Appraisal Inc. can help you remove your Private Mortgage Insurance
It's typically known that a 20% down payment is the standard when purchasing a home. Since the liability for the lender is generally only the difference between the home value and the amount outstanding on the loan, the 20% adds a nice cushion against the costs of foreclosure, reselling the home, and regular value changesin the event a borrower doesn't pay.
The market was accepting down payments down to 10, 5 and even 0 percent during the mortgage boom of the last decade. A lender is able to endure the added risk of the minimal down payment with Private Mortgage Insurance or PMI. PMI protects the lender in the event a borrower defaults on the loan and the value of the house is lower than what is owed on the loan.
PMI is pricey to a borrower on the grounds that the $40-$50 a month per $100,000 borrowed is lumped into the mortgage payment and generally isn't even tax deductible. It's lucrative for the lender because they acquire the money, and they get the money if the borrower is unable to pay, opposite from a piggyback loan where the lender absorbs 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 homeowner refrain from bearing the expense of PMI?
The Homeowners Protection Act of 1998 obligates the lenders on most loans to automatically cancel the PMI when the principal balance of the loan equals 78 percent of the initial loan amount. The law guarantees that, upon request of the home owner, the PMI must be released when the principal amount reaches only 80 percent. So, acute home owners can get off the hook a little early.
It can take many years to get to the point where the principal is only 20% of the initial amount of the loan, so it's crucial to know how your home has grown 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 your loan balance has dropped below the 80% mark? Even when nationwide trends indicate plummeting home values, understand that real estate is local. Your neighborhood may not be adhering to the national trends and/or your home could have acquired equity before things settled down.
The toughest thing for many homeowners to know is just when their home's equity goes over the 20% point. An accredited, licensed real estate appraiser can certainly help. It's an appraiser's job to know the market dynamics of their area. At Ihns Appraisal Inc., we know when property values have risen or declined. We're masters at determining value trends in Ely, Linn County and surrounding areas. Faced with figures from an appraiser, the mortgage company will usually eliminate the PMI with little trouble. At which time, the homeowner can relish the savings from that point on.
Want to learn more about PMI and the Homeowners Protection Act? Click this link: