Crescent Appraisal Group, Inc. can help you remove your Private Mortgage Insurance
When getting a mortgage, a 20% down payment is typically the standard. The lender's risk is oftentimes only the remainder between the home value and the sum due on the loan, so the 20% supplies a nice cushion against the charges of foreclosure, selling the home again, and natural value fluctuations on the chance that a borrower is unable to pay.
The market was taking down payments as low as 10, 5 and often 0 percent during the mortgage boom of the last decade. A lender is able to manage the added risk of the low down payment with Private Mortgage Insurance or PMI. This supplementary plan guards the lender if a borrower is unable to pay on the loan and the market price of the property is less than the balance of the loan.
PMI is costly to a borrower in that the $40-$50 a month per $100,000 borrowed is rolled into the mortgage payment and frequently isn't even tax deductible. It's advantageous for the lender because they acquire the money, and they get paid if the borrower is unable to pay, separate from a piggyback loan where the lender takes in all the damages.
Does your monthly mortgage payment include PMI? Contact us, you may be able to save money by removing your PMI.
How can homebuyers keep from bearing the cost of PMI?
The Homeowners Protection Act of 1998 forces the lenders on most loans to automatically eliminate the PMI when the principal balance of the loan equals 78 percent of the primary loan amount. The law promises that, upon request of the homeowner, the PMI must be released when the principal amount reaches only 80 percent. So, wise home owners can get off the hook sooner than expected.
It can take countless years to get to the point where the principal is just 20% of the original loan amount, so it's essential to know how your home has increased in value. After all, all of the appreciation you've accomplished over the years counts towards removing PMI. So what's the reason for paying it after your loan balance has dropped below the 80% mark? Even when nationwide trends indicate decreasing home values, realize that real estate is local. Your neighborhood might not be adopting the national trends and/or your home might have gained equity before things simmered down.
The difficult thing for many homeowners to know is just when their home's equity goes over the 20% point. An accredited, licensed real estate appraiser can certainly 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 analyzing value trends in Metairie, Jefferson County and surrounding areas. When faced with information from an appraiser, the mortgage company will usually remove the PMI with little anxiety. At which time, the home owner can delight in the savings from that point on.
Want to learn more about PMI and the Homeowners Protection Act? Click this link: