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REID E. CHOATE & ASSOCIATES, LLC can help you remove your Private Mortgage Insurance
It's typically known that a 20% down payment is the standard when purchasing a home.
The lender's risk is often only the difference between the home value and the sum remaining on the loan, so the 20% provides a nice cushion against the charges of foreclosure, selling the home again, and natural value changes in the event a purchaser is unable to pay.
The market was accepting down payments dropping to 10, 5 and even 0 percent in the peak of last decade's mortgage boom.
A lender is able to handle the increased risk of the reduced down payment with Private Mortgage Insurance or PMI.
PMI guards the lender in the event a borrower defaults on the loan and the market price of the home is less than what the borrower still owes on the loan.
Since the $40-$50 a month per $100,000 borrowed is rolled into the mortgage payment and frequently isn't even tax deductible, PMI can be pricey to a borrower.
It's money-making for the lender because they secure the money, and they get paid if the borrower is unable to pay, in contrast to a piggyback loan where the lender consumes all the damages.
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The amount you keep from dropping the PMI required when you got your mortgage will make up for the price of the appraisal in no time. REID E. CHOATE & ASSOCIATES, LLC has years of experience with value trends in the city of Pahoa and Hawaii County. Contact us today.
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How can buyers prevent bearing the expense of PMI?
As a result of The Homeowners Protection Act of 1998, lenders are forced to automatically cancel the PMI when the principal balance of the loan equals 78 percent of the original loan amount on most loans.
Acute homeowners can get off the hook beforehand. The law promises that, at the request of the homeowner, the PMI must be abandoned when the principal amount equals only 80 percent.
Because it can take a significant number of years to reach the point where the principal is only 80% of the initial amount of the loan, it's important to know how your Hawaii home has grown in value.
After all, any appreciation you've achieved over the years counts towards dismissing PMI. So why pay it after the balance of your loan has dropped below the 80% mark?
Even when nationwide trends hint at declining home values, be aware that real estate is local. Your neighborhood may not be heeding the national trends and/or your home might have gained equity before things cooled off.
An accredited, Hawaii licensed real estate appraiser can help home owners figure out 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 know the market dynamics of their area.
At REID E. CHOATE & ASSOCIATES, LLC, we're experts at identifying value trends in Pahoa, Hawaii County, and surrounding areas, and we know when property values have risen or declined.
When faced with data from an appraiser, the mortgage company will often eliminate the PMI with little trouble. At which time, the homeowner can retain the savings from that point on.
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Did you have less than 20% to put down on your mortgage? Contact 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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