Webb Appraisers, LLC can help you remove your Private Mortgage Insurance
A 20% down payment is typically accepted when purchasing a home. The lender's liability is usually only the difference between the home value and the amount due on the loan, so the 20% supplies a nice cushion against the charges of foreclosure, selling the home again, and natural value variations in the event a borrower is unable to pay.
During the recent mortgage boom of the mid 2000s, it was common to see lenders commanding down payments of 10, 5 or often 0 percent. How does a lender manage the added risk of the small down payment? The answer is Private Mortgage Insurance or PMI. This added plan takes care of the lender in the event a borrower is unable to pay on the loan and the worth of the home is lower than the balance of the loan.
PMI is costly to a borrower on the grounds that the $40-$50 a month per $100,000 borrowed is lumped into the mortgage payment and generally isn't even tax deductible. Separate from a piggyback loan where the lender consumes all the losses, PMI is profitable for the lender because they acquire 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 can a homebuyer refrain from bearing the expense of PMI?
With the employment of The Homeowners Protection Act of 1998, on nearly all loans lenders are required to automatically terminate the PMI when the principal balance of the loan equals 78 percent of the primary loan amount. Keen 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.
Because it can take countless years to reach the point where the principal is only 20% of the initial amount borrowed, it's important to know how your home has appreciated in value. After all, any appreciation you've accomplished over the years counts towards abolishing PMI. So why should you pay it after the balance of your loan has dropped below the 80% threshold? Your neighborhood might not be minding the national trends and/or your home may have acquired equity before things settled down, so even when nationwide trends signify declining home values, you should understand that real estate is local.
A certified, licensed real estate appraiser can help home owners understand just when their home's equity rises above the 20% point, as it's a hard thing to know. It's an appraiser's job to recognize the market dynamics of their area. At Webb Appraisers, LLC, we know when property values have risen or declined. We're masters at analyzing value trends in Fort Myers, Lee County and surrounding areas. Faced with data from an appraiser, the mortgage company will generally eliminate the PMI with little trouble. At which time, the home owner can relish the savings from that point on.
Want to learn more about PMI and the Homeowners Protection Act? Click this link: