On-Time Appraisers, Inc can help you remove your Private Mortgage Insurance. PMI.
When getting a mortgage, a 20% down payment is typically the standard. Since the liability for the lender is generally only the difference between the home value and the sum due on the loan, the 20% adds a nice buffer against the charges of foreclosure, selling the home again, and typical value changes in the event a purchaser is unable to pay.
During the recent mortgage upturn of the mid-2000s, it was widespread to see lenders requiring down payments of 10, 5 or often 0 percent. How does a lender endure the added risk of the low down payment? The answer is Private Mortgage Insurance or PMI. PMI guards the lender in the event a borrower doesn't pay on the loan and the market price of the home is lower than what is owed on the loan.
PMI is pricey 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. Opposite from a piggyback loan where the lender absorbs all the costs, PMI is money-making for the lender because they acquire the money, and they get paid if the borrower defaults.
Does your monthly mortgage payment include PMI? Contact us, you may be able to save money by removing your PMI.
How can homeowners refrain from paying PMI?
The Homeowners Protection Act of 1998 obligates the lenders on most loans to automatically eliminate the PMI when the principal balance of the loan equals 78 percent of the original loan amount. Smart homeowners can get off the hook ahead of time. The law guarantees that, at the request of the homeowner, the PMI must be dropped when the principal amount reaches only 80 percent.
It can take countless years to reach the point where the principal is only 20% of the initial amount of the loan, so it's crucial to know how your home has appreciated in value. After all, every bit of appreciation you've gained over time counts towards abolishing PMI. So, what's the reason for paying it after your loan balance has dropped below the 80% threshold? Even when nationwide trends forecast plunging home values, realize that real estate is local. Your neighborhood might not be minding the national trends and/or your home may have secured equity before things settled down.
The hardest thing for many homeowners to understand is just when their home's equity rises above the 20% point. An accredited, licensed real estate appraiser can surely help. It's an appraiser's job to recognize the market dynamics of their area. At On-Time Appraisers, Inc, we're masters at analyzing value trends in Miami-Dade and Broward counties and surrounding areas, and we know when property values have risen or declined. When faced with figures from an appraiser, the mortgage company will generally cancel the PMI with little anxiety. At that time, the homeowner can enjoy the savings from that point on.
Want to learn more about PMI and the Homeowners Protection Act? Click this link: