Have equity in your home? Want a lower payment? An appraisal from Ruffino Appraisal Group, LLC. can help you get rid of your PMI.
When getting a mortgage, a 20% down payment is typically the standard. Since the risk for the lender is usually only the difference between the home value and the amount remaining on the loan, the 20% supplies a nice cushion against the expenses of foreclosure, reselling the home, and typical value variationson the chance that a purchaser defaults.
During the recent mortgage boom of the last decade, it was widespread to see lenders taking down payments of 10, 5 or even 0 percent. How does a lender manage the added risk of the small down payment? The solution is Private Mortgage Insurance or PMI. This added plan takes care of the lender in the event a borrower defaults on the loan and the worth of the property is less than the balance of the loan.
Since the $40-$50 a month per $100,000 borrowed is bundled into the mortgage monthly payment and many times isn't even tax deductible, PMI can be expensive to a borrower. Different from a piggyback loan where the lender takes in all the deficits, PMI is lucrative for the lender because they acquire the money, and they receive payment if the borrower is unable to pay.
Does your monthly mortgage payment include PMI? Contact us, you may be able to save money by removing your PMI.
How can a homeowner avoid paying PMI?
With the utilization of The Homeowners Protection Act of 1998, on most loans lenders are obligated to automatically eliminate the PMI when the principal balance of the loan equals 78 percent of the original loan amount. The law states that, at the request of the homeowner, the PMI must be released when the principal amount reaches just 80 percent. So, keen home owners can get off the hook a little early.
Because 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, any appreciation you've obtained over time counts towards dismissing PMI. So what's the reason for paying it after your loan balance has dropped below the 80% threshold? Your neighborhood might not be heeding the national trends and/or your home might have secured equity before things simmered down, so even when nationwide trends predict decreasing home values, you should understand that real estate is local.
An accredited, licensed real estate appraiser can help homeowners understand 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 know the market dynamics of their area. At Ruffino Appraisal Group, LLC., we know when property values have risen or declined. We're masters at identifying value trends in Margate, Broward County and surrounding areas. When faced with data from an appraiser, the mortgage company will often 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: