REVARI (Real Estate Valuation and Research Inc.) can help you remove your Private Mortgage Insurance
When buying a house, a 20% down payment is usually the standard. Considering the risk for the lender is generally only the difference between the home value and the sum remaining on the loan, the 20% provides a nice cushion against the expenses of foreclosure, reselling the home, and natural value variationson the chance that a purchaser defaults.
Banks were working with down payments as low as 10, 5 and often 0 percent in the peak of last decade's mortgage boom. How does a lender handle the increased risk of the small down payment? The solution is Private Mortgage Insurance or PMI. This added plan covers the lender in the event a borrower defaults on the loan and the value of the home is lower than what the borrower still owes on the loan.
PMI can be expensive to a borrower in that the $40-$50 a month per $100,000 borrowed is rolled into the mortgage payment and many times isn't even tax deductible. Contradictory to a piggyback loan where the lender takes in all the costs, PMI is money-making for the lender because they acquire the money, and they receive payment 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 a home owner refrain from paying PMI?
The Homeowners Protection Act of 1998 obligates the lenders on nearly all loans to automatically stop the PMI when the principal balance of the loan reaches 78 percent of the beginning loan amount. Smart home owners can get off the hook a little earlier. The law promises that, at the request of the home owner, the PMI must be released when the principal amount reaches just 80 percent.
Since it can take countless years to arrive at the point where the principal is only 20% of the initial amount borrowed, it's important to know how your home has increased in value. After all, every bit of appreciation you've gained over time counts towards removing PMI. So why pay it after the balance of your loan has dropped below the 80% threshold? Despite the fact that nationwide trends predict falling home values, be aware that real estate is local. Your neighborhood may not be heeding the national trends and/or your home could have acquired equity before things calmed down.
A certified, licensed real estate appraiser can help home owners understand just when their home's equity goes over the 20% point, as it's a difficult thing to know. As appraisers, it's our job to recognize the market dynamics of our area. At REVARI (Real Estate Valuation and Research Inc.), we know when property values have risen or declined. We're masters at pinpointing value trends in Claremont, Sullivan County and surrounding areas. When faced with figures from an appraiser, the mortgage company will most often eliminate the PMI with little effort. At that time, the homeowner can delight in the savings from that point on.
Want to learn more about PMI and the Homeowners Protection Act? Click this link:
Would you like to save money by not having to pay for Private Mortgage Insurance? We can help. Simply fill out the form below as completely as possible and we'll send you information on how to save PMI expenses, with no obligation to you. We guarantee your privacy.