Crescent Appraisal Group, Inc. can help you remove your Private Mortgage Insurance
It's typically known that a 20% down payment is accepted when getting a mortgage. Considering the risk for the lender is usually only the remainder between the home value and the sum outstanding on the loan, the 20% provides a nice buffer against the expenses of foreclosure, reselling the home, and regular value changeson the chance that a borrower defaults.
Lenders were working with down payments as low as 10, 5 and often 0 percent during the mortgage boom of the last decade. A lender is able to handle the additional risk of the small down payment with Private Mortgage Insurance or PMI. This additional policy covers the lender if a borrower is unable to pay on the loan and the value of the house is lower than what is owed on the loan.
PMI can be costly to a borrower because the $40-$50 a month per $100,000 borrowed is compiled into the mortgage payment and generally isn't even tax deductible. It's advantageous for the lender because they secure the money, and they receive payment if the borrower doesn't pay, unlike a piggyback loan where the lender consumes all the costs.
Does your monthly mortgage payment include PMI? Contact us, you may be able to save money by removing your PMI.
How home owners can keep from paying PMI
The Homeowners Protection Act of 1998 obligates the lenders on nearly all loans to automatically terminate the PMI when the principal balance of the loan reaches 78 percent of the initial loan amount. The law designates that, upon request of the home owner, the PMI must be released when the principal amount reaches just 80 percent. So, acute homeowners can get off the hook a little earlier.
Because it can take countless years to reach the point where the principal is only 20% of the original amount borrowed, it's necessary to know how your home has appreciated in value. After all, all of the appreciation you've accomplished over the years counts towards dismissing PMI. So what's the reason for paying it after the balance of your loan has fallen below the 80% threshold? Despite the fact that nationwide trends forecast declining home values, be aware that real estate is local. Your neighborhood may not be adhering to the national trends and/or your home could have gained equity before things calmed down.
The toughest thing for many home owners to know is just when their home's equity goes over the 20% point. A certified, licensed real estate appraiser can definitely help. It is an appraiser's job to keep up with the market dynamics of their area. At Crescent Appraisal Group, Inc., we're experts at identifying value trends in Metairie, Jefferson 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 generally cancel the PMI with little trouble. At which 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: