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Let Appraisers Now, Inc. help you discover if you can get rid of your PMI
When getting a mortgage, a 20% down payment is typically the standard.
The lender's liability is generally only the difference between the home value and the sum due on the loan, so the 20% adds a nice cushion against the expenses of foreclosure, reselling the home, and regular value fluctuations on the chance that a borrower doesn't pay.
The market was taking down payments as low as 10, 5 and frequently 0 percent during the mortgage boom of the last decade.
How does a lender manage the added risk of the small down payment? The solution is Private Mortgage Insurance or PMI.
PMI protects the lender if a borrower defaults on the loan and the value of the home is less than the balance of the loan.
Because the $40-$50 a month per $100,000 borrowed is compiled into the mortgage monthly payment and oftentimes isn't even tax deductible, PMI can be expensive to a borrower.
It's money-making for the lender because they collect the money, and they get paid if the borrower defaults, unlike a piggyback loan where the lender absorbs all the costs.
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Does your monthly mortgage payment include a fee PMI? Call Appraisers Now, Inc. today at (504) 394-6265 or send us an e-mail. A new appraisal could save you thousands.
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How homebuyers can keep from bearing the expense of PMI
With the passage of The Homeowners Protection Act of 1998, lenders are forced to automatically terminate the PMI when the principal balance of the loan equals 78 percent of the original loan amount on most loans.
The law designates that, at the request of the homeowner, the PMI must be abandoned when the principal amount reaches just 80 percent. So, keen homeowners can get off the hook sooner than expected.
Considering it can take several years to reach the point where the principal is just 80% of the original amount of the loan, it's essential to know how your Louisiana home has appreciated in value.
After all, every bit of appreciation you've gained over time counts towards removing PMI. So what's the reason for paying it after your loan balance has fallen below the 80% threshold?
Your neighborhood might not follow national trends and/or your home could have gained equity before the economy simmered down. So even when nationwide trends signify declining home values, you should know most importantly that real estate is local.
A certified, Louisiana licensed real estate appraiser can help homeowners figure out just when their home's equity rises above the 20% point, as it's a hard thing to know.
It is an appraiser's job to recognize the market dynamics of their area.
At Appraisers Now, Inc., we're experts at analyzing value trends in Marrero, Jefferson County, and surrounding areas, and we know when property values have risen or declined.
Faced with figures from an appraiser, the mortgage company will usually eliminate the PMI with little effort. At which time, the homeowner can retain the savings from that point on.
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Has your real estate appreciated since you first purchased? Contact Appraisers Now, Inc. today at (504) 394-6265. You may be able to save money by removing your Private Mortgage Insurance payment.
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Want to learn more about PMI and the Homeowners Protection Act? Click this link:
Cancellation of Private Mortgage Insurance: Federal Law May Save You Hundreds of Dollars Each Year
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