Crescent Appraisal Group, Inc. can help you remove your Private Mortgage Insurance
When buying a house, a 20% down payment is typically the standard. The lender's risk is generally only the difference between the home value and the sum due on the loan, so the 20% provides a nice cushion against the charges of foreclosure, reselling the home, and typical value changes on the chance that a borrower is unable to pay.
The market was 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 endure the added risk of the small down payment with Private Mortgage Insurance or PMI. PMI guards the lender if a borrower doesn't pay on the loan and the worth of the house is lower than the loan balance.
PMI is costly to a borrower in that the $40-$50 a month per $100,000 borrowed is lumped into the mortgage monthly payment and frequently isn't even tax deductible. Contradictory to a piggyback loan where the lender consumes all the damages, PMI is profitable for the lender because they secure the money, and they receive payment 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 home owners can avoid paying PMI
With the employment of The Homeowners Protection Act of 1998, on nearly all loans lenders are forced to automatically terminate the PMI when the principal balance of the loan equals 78 percent of the beginning loan amount. The law pledges that, upon request of the homeowner, the PMI must be abandoned when the principal amount equals just 80 percent. So, wise homeowners can get off the hook sooner than expected.
It can take countless years to reach the point where the principal is only 20% of the original amount of the loan, so it's important to know how your home has increased in value. After all, every bit of appreciation you've obtained over time counts towards removing PMI. So why pay it after the balance of your loan has dropped below the 80% threshold? Even when nationwide trends signify plunging home values, be aware that real estate is local. Your neighborhood may not be heeding the national trends and/or your home may have secured equity before things settled down.
The difficult 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's an appraiser's job to know the market dynamics of their area. At Crescent Appraisal Group, Inc., we know when property values have risen or declined. We're experts at recognizing value trends in Metairie, Jefferson County and surrounding areas. When faced with data from an appraiser, the mortgage company will often drop the PMI with little anxiety. At which 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: