Ruffino Appraisal Group, LLC. can help you remove your Private Mortgage Insurance
When buying a house, a 20% down payment is usually the standard. Because the liability for the lender is oftentimes only the difference between the home value and the sum remaining on the loan, the 20% provides a nice cushion against the charges of foreclosure, reselling the home, and typical value fluctuationsin the event a purchaser defaults.
The market was working with down payments down to 10, 5 and even 0 percent during the mortgage boom of the last decade. A lender is able to handle the additional risk of the low down payment with Private Mortgage Insurance or PMI. This added policy guards the lender in the event a borrower defaults on the loan and the value of the property is lower than what the borrower still owes on the loan.
Since the $40-$50 a month per $100,000 borrowed is bundled into the mortgage payment and often isn't even tax deductible, PMI is pricey to a borrower. It's money-making for the lender because they obtain the money, and they get the money if the borrower doesn't pay, opposite from a piggyback loan where the lender consumes 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 homebuyer avoid bearing the cost of PMI?
The Homeowners Protection Act of 1998 makes the lenders on nearly all loans to automatically cancel the PMI when the principal balance of the loan equals 78 percent of the initial loan amount. Smart home owners can get off the hook beforehand. The law guarantees that, upon request of the homeowner, the PMI must be dropped when the principal amount reaches only 80 percent.
It can take countless years to reach the point where the principal is just 20% of the initial amount borrowed, so it's essential to know how your home has appreciated in value. After all, all of the appreciation you've accomplished over time counts towards removing PMI. So what's the reason for paying it after your loan balance has fallen below the 80% mark? Even when nationwide trends forecast falling home values, realize that real estate is local. Your neighborhood may not be minding the national trends and/or your home might have gained equity before things calmed down.
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 hard thing to know. It's an appraiser's job to recognize 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 information from an appraiser, the mortgage company will often eliminate the PMI with little trouble. At which time, the homeowner can enjoy the savings from that point on.
Want to learn more about PMI and the Homeowners Protection Act? Click this link: