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REID E. CHOATE & ASSOCIATES, LLC can help you remove your Private Mortgage Insurance
It's typically understood that a 20% down payment is common when buying a house.
The lender's only risk is often just the difference between the home value and the sum remaining on the loan, so the 20% supplies a nice buffer against the costs of foreclosure, selling the home again, and regular value fluctuations in the event a borrower defaults.
During the recent mortgage upturn of the last decade, it was customary to see lenders only asking for down payments of 10, 5 or often 0 percent.
A lender is able to manage the added risk of the minimal down payment with Private Mortgage Insurance or PMI.
PMI protects the lender if a borrower doesn't pay on the loan and the value of the house is lower than what is owed on the loan.
PMI can be expensive to a borrower because the $40-$50 a month per $100,000 borrowed is lumped into the mortgage payment and oftentimes isn't even tax deductible.
As opposed to a piggyback loan where the lender takes in all the deficits, PMI is advantageous for the lender because they collect the money, and they get the money if the borrower is unable to pay.
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The savings from dropping your PMI will make up for the cost of the appraisal in no time. Nobody is more qualified than REID E. CHOATE & ASSOCIATES, LLC when it comes to appreciating values in the city of Pahoa and Hawaii County. Contact us today.
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How can homeowners keep from bearing the cost of PMI?
With the passage of The Homeowners Protection Act of 1998, lenders are required to automatically cease the PMI when the principal balance of the loan equals 78 percent of the original loan amount on most loans.
Smart home owners can get off the hook beforehand. The law promises that, upon request of the homeowner, the PMI must be abandoned when the principal amount equals just 80 percent.
It can take many years to get to the point where the principal is just 80% of the original loan amount, so it's essential to know how your Hawaii home has increased in value.
After all, every bit of appreciation you've acquired over time counts towards abolishing PMI. So why should you pay it after the balance of your loan has fallen below the 80% mark?
Your neighborhood may not conform to national trends and/or your home might have gained equity before things cooled off. So even when nationwide trends predict decreasing home values, you should realize that real estate is local.
A certified, Hawaii licensed real estate appraiser can help homeowners figure out just when their home's equity rises above the 20% point, as it's a tough thing to know.
It is an appraiser's job to recognize the market dynamics of their area.
At REID E. CHOATE & ASSOCIATES, LLC, we know when property values have risen or declined. We're experts at pinpointing value trends in Pahoa, Hawaii County, and surrounding areas.
Faced with information from an appraiser, the mortgage company will most often eliminate the PMI with little anxiety. At that time, the homeowner can enjoy the savings from that point on.
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Did you have less than 20% to put down on your mortgage? Call REID E. CHOATE & ASSOCIATES, LLC today at 808-965-0238. You may be able to get rid of your Private Mortgage Insurance payment.
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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
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