Let Harris Appraisals LLC help you figure out if you can cancel your PMIWhen buying a house, 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 outstanding on the loan, the 20% adds a nice buffer against the costs of foreclosure, reselling the home, and regular value fluctuationson the chance that a purchaser defaults. During the recent mortgage boom of the last decade, it became common to see lenders requiring down payments of 10, 5 or often 0 percent. How does a lender handle the additional risk of the low down payment? The solution is Private Mortgage Insurance or PMI. This supplementary plan covers the lender if a borrower defaults on the loan and the market price of the property is lower than the balance of the loan. PMI is pricey to a borrower because the $40-$50 a month per $100,000 borrowed is compiled into the mortgage monthly payment and oftentimes isn't even tax deductible. Unlike a piggyback loan where the lender absorbs all the deficits, PMI is money-making for the lender because they acquire the money, and they get the money 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 a homebuyer avoid paying PMI?With the utilization of The Homeowners Protection Act of 1998, on most loans lenders are forced to automatically terminate the PMI when the principal balance of the loan reaches 78 percent of the beginning loan amount. Savvy homeowners can get off the hook beforehand. The law stipulates that, at the request of the homeowner, the PMI must be dropped when the principal amount reaches only 80 percent. Since it can take many years to arrive at the point where the principal is just 20% of the initial amount of the loan, it's crucial to know how your home has grown in value. After all, all of the appreciation you've achieved over the years counts towards abolishing PMI. So why should you pay it after your loan balance has fallen below the 80% threshold? Despite the fact that nationwide trends signify plummeting home values, understand that real estate is local. Your neighborhood may not be minding the national trends and/or your home could have gained equity before things settled down. 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 tough thing to know. As appraisers, it's our job to understand the market dynamics of our area. At Harris Appraisals LLC, we're masters at analyzing value trends in Alexander City, Tallapoosa County and surrounding areas, and we know when property values have risen or declined. Faced with data from an appraiser, the mortgage company will often remove the PMI with little effort. At that time, the home owner can retain the savings from that point on.
Want to learn more about PMI and the Homeowners Protection Act? Click this link: |