Have equity in your home? Want a lower payment? An appraisal from REID E. CHOATE & ASSOCIATES, LLC can help you get rid of your PMI.
A 20% down payment is usually accepted when buying a house. Because 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 cushion against the expenses of foreclosure, selling the home again, and natural value changesin the event a purchaser doesn't pay.
The market was taking down payments down to 10, 5 and even 0 percent during the mortgage boom of the last decade. A lender is able to handle the increased risk of the reduced down payment with Private Mortgage Insurance or PMI. PMI covers the lender in the event a borrower is unable to pay on the loan and the worth of the house is less than the balance of the loan.
PMI can be costly to a borrower on the grounds that the $40-$50 a month per $100,000 borrowed is bundled into the mortgage monthly payment and oftentimes isn't even tax deductible. Separate from a piggyback loan where the lender consumes all the deficits, PMI is favorable for the lender because they collect the money, and they get paid if the borrower defaults.
Does your monthly mortgage payment include PMI? Contact us, you may be able to save money by removing your PMI.
How can home owners keep from bearing the cost of PMI?
The Homeowners Protection Act of 1998 forces the lenders on nearly all loans to automatically cancel the PMI when the principal balance of the loan reaches 78 percent of the initial loan amount. Savvy homeowners can get off the hook sooner than expected. The law promises that, upon request of the homeowner, the PMI must be dropped when the principal amount equals just 80 percent.
Because it can take many years to arrive at 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 accomplished over time counts towards removing PMI. So why should you pay it after the balance of your loan has dropped below the 80% mark? Even when nationwide trends forecast plunging home values, be aware that real estate is local. Your neighborhood may not be reflecting the national trends and/or your home could have acquired equity before things cooled off.
The hardest thing for almost all home owners to know is just when their home's equity rises above the 20% point. An accredited, licensed real estate appraiser can surely help. It's an appraiser's job to recognize the market dynamics of their area. At REID E. CHOATE & ASSOCIATES, LLC, we're experts at recognizing value trends in Pahoa, Hawaii County and surrounding areas, and we know when property values have risen or declined. 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 retain the savings from that point on.
Want to learn more about PMI and the Homeowners Protection Act? Click this link: