Crescent Appraisal Group, Inc. can help you remove your Private Mortgage Insurance
When purchasing a home, a 20% down payment is usually the standard. The lender's liability is usually only the difference between the home value and the sum remaining on the loan, so the 20% adds a nice buffer against the expenses of foreclosure, reselling the home, and typical value fluctuations in the event a purchaser doesn't pay.
The market was accepting down payments as low as 10, 5 and often 0 percent during the mortgage boom of the mid 2000s. A lender is able to endure the added risk of the low down payment with Private Mortgage Insurance or PMI. PMI covers the lender in the event a borrower defaults on the loan and the worth of the house is less than what the borrower still owes on the loan.
PMI can be costly to a borrower on the grounds that the $40-$50 a month per $100,000 borrowed is lumped into the mortgage payment and frequently isn't even tax deductible. Unlike a piggyback loan where the lender takes in all the costs, PMI is advantageous for the lender because they collect the money, and they get paid if the borrower doesn't pay.
Does your monthly mortgage payment include PMI? Contact us, you may be able to save money by removing your PMI.
How can a homebuyer avoid paying PMI?
The Homeowners Protection Act of 1998 obligates the lenders on nearly all loans to automatically eliminate the PMI when the principal balance of the loan equals 78 percent of the initial loan amount. Savvy homeowners can get off the hook a little earlier. The law pledges that, upon request of the homeowner, the PMI must be abandoned when the principal amount reaches just 80 percent.
It can take countless years to get to the point where the principal is just 20% of the original amount borrowed, so it's necessary to know how your home has appreciated in value. After all, all of the appreciation you've achieved over time counts towards removing PMI. So why should you pay it after the balance of your loan has fallen below the 80% threshold? Even when nationwide trends indicate falling home values, realize that real estate is local. Your neighborhood might not be reflecting the national trends and/or your home may have acquired equity before things settled down.
An accredited, licensed real estate appraiser can help homeowners understand just when their home's equity rises above the 20% point, as it's a hard thing to know. As appraisers, it's our job to know the market dynamics of our area. At Crescent Appraisal Group, Inc., we know when property values have risen or declined. We're masters at recognizing value trends in Metairie, Jefferson County and surrounding areas. Faced with information from an appraiser, the mortgage company will often do away with the PMI with little trouble. At that time, the home owner can enjoy the savings from that point on.
Want to learn more about PMI and the Homeowners Protection Act? Click this link: