Accurate Appraisers can help you remove your Private Mortgage Insurance
When getting a mortgage, a 20% down payment is typically the standard.
The lender's risk is usually only the remainder between the home value and the sum outstanding on the loan, so the 20% adds a nice cushion against the costs of foreclosure, reselling the home, and typical value fluctuations in the event a purchaser is unable to pay.
During the recent mortgage boom that our country recently experienced, it became common to see lenders reducing down payments to 10, 5 or even 0 percent.
How does a lender endure the increased risk of the small down payment? The solution is Private Mortgage Insurance or PMI.
This added plan covers the lender in case a borrower doesn't pay on the loan and the market price of the property is lower than what is owed on the loan.
PMI is pricey to a borrower in that the $40-$50 a month per $100,000 borrowed is rolled into the mortgage monthly payment and many times isn't even tax deductible.
It's money-making for the lender because they secure the money, and they get the money if the borrower is unable to pay, in contrast to a piggyback loan where the lender takes in all the damages.
The savings from getting rid of your PMI will make up for the price of the appraisal in a matter of months. Accurate Appraisers has years of experience with value trends in the Bay County, Saginaw County, and Midland County. Contact us today.
How home owners can keep from paying PMI
With the passage of The Homeowners Protection Act of 1998, lenders are required to automatically cancel the PMI when the principal balance of the loan equals 78 percent of the beginning loan amount on nearly all loans.
The law guarantees that, upon request of the home owner, the PMI must be released when the principal amount equals just 80 percent. So, keen homeowners can get off the hook a little early.
It can take a significant number of years to arrive at the point where the principal is only 80% of the original loan amount, so it's essential to know how your Michigan home has increased in value.
After all, every bit of appreciation you've acquired over time counts towards removing PMI. So why pay it after the balance of your loan has fallen below the 80% threshold?
Your neighborhood may not follow national trends and/or your home might have secured equity before the economy declined. So even when nationwide trends indicate decreasing home values, you should understand that real estate is local.
The toughest thing for many consumers to figure out is whether their home equity has exceeded the 20% point. A certified, Michigan licensed real estate appraiser can surely help.
It's an appraiser's job to keep up with the market dynamics of their area.
At Accurate Appraisers, we know when property values have risen or declined. We're masters at recognizing value trends in Bay County, Saginaw County, and Midland County.
Faced with information from an appraiser, the mortgage company will generally remove the PMI with little trouble. At which time, the home owner can relish the savings from that point on.
The money you keep from dropping your PMI will make up for the price of the appraisal in no time. Accurate Appraisers are experts when it comes to real estate value trends in Bay County, Midland County, and Saginaw County. Contact us today.
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