Crescent Appraisal Group, Inc. can help you remove your Private Mortgage Insurance
When buying a house, a 20% down payment is typically the standard. Since the risk for the lender is oftentimes only the remainder between the home value and the amount due on the loan, the 20% supplies a nice cushion against the charges of foreclosure, reselling the home, and typical value changesin the event a borrower defaults.
The market was taking down payments down to 10, 5 and even 0 percent in the peak of last decade's mortgage boom. How does a lender manage the additional risk of the low down payment? The solution is Private Mortgage Insurance or PMI. This supplemental plan takes care of the lender in case a borrower is unable to pay on the loan and the worth of the house is lower than what is owed on the loan.
PMI is costly to a borrower on the grounds that the $40-$50 a month per $100,000 borrowed is compiled into the mortgage payment and often isn't even tax deductible. Different from a piggyback loan where the lender takes in all the damages, PMI is beneficial for the lender because they secure 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 home owner keep from bearing the cost of PMI?
The Homeowners Protection Act of 1998 obligates the lenders on nearly all loans to automatically cease the PMI when the principal balance of the loan equals 78 percent of the original loan amount. Wise home owners can get off the hook sooner than expected. The law states that, upon request of the home owner, the PMI must be dropped when the principal amount equals just 80 percent.
It can take countless years to arrive at the point where the principal is only 20% of the original loan amount, so it's crucial to know how your home has appreciated in value. After all, any appreciation you've achieved over time counts towards dismissing PMI. So why pay it after your loan balance has dropped below the 80% threshold? Your neighborhood may not be minding the national trends and/or your home may have gained equity before things settled down, so even when nationwide trends forecast falling home values, you should realize that real estate is local.
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 difficult thing to know. As appraisers, it's our job to recognize the market dynamics of our area. At Crescent Appraisal Group, Inc., we know when property values have risen or declined. We're masters at analyzing value trends in Metairie, Jefferson County and surrounding areas. Faced with information from an appraiser, the mortgage company will generally remove the PMI with little trouble. At that time, the home owner can relish the savings from that point on.
Want to learn more about PMI and the Homeowners Protection Act? Click this link: