Medina Appraisal Company can help you remove your Private Mortgage InsuranceA 20% down payment is typically accepted when buying a house. Considering the liability for the lender is usually only the remainder between the home value and the sum due on the loan, the 20% provides a nice buffer against the expenses of foreclosure, selling the home again, and regular value variationson the chance that a borrower doesn't pay. During the recent mortgage boom of the mid 2000s, it became customary to see lenders taking down payments of 10, 5 or sometimes 0 percent. A lender is able to manage the additional risk of the reduced down payment with Private Mortgage Insurance or PMI. PMI covers the lender if a borrower is unable to pay on the loan and the market price of the property is lower than what the borrower still owes on the loan. Because the $40-$50 a month per $100,000 borrowed is rolled into the mortgage monthly payment and often isn't even tax deductible, PMI can be pricey to a borrower. It's beneficial for the lender because they collect the money, and they receive payment if the borrower is unable to pay, unlike a piggyback loan where the lender consumes all the deficits. ![]() Does your monthly mortgage payment include PMI? Contact us, you may be able to save money by removing your PMI. How buyers can avoid bearing the expense of PMIWith the employment of The Homeowners Protection Act of 1998, on nearly all loans lenders are forced to automatically cancel the PMI when the principal balance of the loan equals 78 percent of the original loan amount. Keen home owners can get off the hook sooner than expected. The law designates that, upon request of the homeowner, the PMI must be released when the principal amount equals only 80 percent. It can take countless years to get to the point where the principal is just 20% of the original amount of the loan, so it's necessary to know how your home has grown in value. After all, all of the appreciation you've acquired over the years counts towards dismissing PMI. So what's the reason for paying it after your loan balance has fallen below the 80% mark? Despite the fact that nationwide trends indicate plummeting home values, realize that real estate is local. Your neighborhood might not be minding the national trends and/or your home might have secured equity before things cooled off. An accredited, licensed real estate appraiser can help home owners understand just when their home's equity goes over the 20% point, as it's a tough thing to know. As appraisers, it's our job to recognize the market dynamics of our area. At Medina Appraisal Company, we're experts at recognizing value trends in Brunswick, OH, Medina County and surrounding areas, and we know when property values have risen or declined. When faced with figures from an appraiser, the mortgage company will usually cancel the PMI with little trouble. At which time, the homeowner can enjoy the savings from that point on.
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