Appraise Colorado Inc can help you remove your Private Mortgage Insurance
It's generally inferred that a 20% down payment is the standard when getting a mortgage. Since the risk for the lender is often only the difference between the home value and the amount due on the loan, the 20% provides a nice cushion against the costs of foreclosure, reselling the home, and natural value variationsin the event a borrower defaults.
During the recent mortgage upturn of the last decade, it was customary to see lenders commanding down payments of 10, 5 or often 0 percent. How does a lender handle the added risk of the small down payment? The answer is Private Mortgage Insurance or PMI. This added policy covers the lender in case a borrower doesn't pay on the loan and the value of the house is less than what the borrower still owes on the loan.
PMI can be pricey to a borrower because the $40-$50 a month per $100,000 borrowed is compiled into the mortgage monthly payment and generally isn't even tax deductible. It's profitable for the lender because they obtain the money, and they get the money if the borrower is unable to pay, opposite from a piggyback loan where the lender takes in all the losses.
Does your monthly mortgage payment include PMI? Contact us, you may be able to save money by removing your PMI.
How can a buyer prevent bearing the cost of PMI?
With the utilization of The Homeowners Protection Act of 1998, on most loans lenders are required to automatically cancel the PMI when the principal balance of the loan reaches 78 percent of the primary loan amount. The law pledges that, at the request of the home owner, the PMI must be abandoned when the principal amount equals only 80 percent. So, savvy homeowners can get off the hook a little early.
Considering it can take countless years to arrive at the point where the principal is just 20% of the initial loan amount, it's essential to know how your home has grown in value. After all, every bit of appreciation you've acquired over the years counts towards removing PMI. So why should you pay it after the balance of your loan has fallen below the 80% mark? Even when nationwide trends predict decreasing home values, be aware that real estate is local. Your neighborhood might not be minding the national trends and/or your home might have acquired equity before things cooled off.
A certified, licensed real estate appraiser can help homeowners 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 keep up with the market dynamics of our area. At Appraise Colorado Inc, we're masters at analyzing value trends in Parker, Arapahoe County and surrounding areas, and we know when property values have risen or declined. When faced with data from an appraiser, the mortgage company will generally do away with the PMI with little trouble. At that time, the homeowner can relish the savings from that point on.
Want to learn more about PMI and the Homeowners Protection Act? Click this link: