Ruffino Appraisal Group, LLC. can help you remove your Private Mortgage Insurance
When getting a mortgage, a 20% down payment is typically the standard. Considering the risk for the lender is oftentimes only the difference between the home value and the sum outstanding on the loan, the 20% supplies a nice cushion against the charges of foreclosure, selling the home again, and typical value changesin the event a purchaser doesn't pay.
The market was accepting down payments as low as 10, 5 and even 0 percent in the peak of last decade's mortgage boom. A lender is able to manage the increased risk of the small down payment with Private Mortgage Insurance or PMI. PMI takes care of the lender in case a borrower is unable to pay on the loan and the value of the property is lower than the balance of the loan.
PMI is pricey to a borrower because the $40-$50 a month per $100,000 borrowed is compiled into the mortgage monthly payment and often isn't even tax deductible. Opposite from a piggyback loan where the lender consumes all the losses, PMI is favorable for the lender because they collect the money, and they get paid 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 buyer keep from bearing the expense of PMI?
The Homeowners Protection Act of 1998 requires the lenders on most loans to automatically terminate the PMI when the principal balance of the loan equals 78 percent of the primary loan amount. The law promises that, upon request of the homeowner, the PMI must be abandoned when the principal amount equals just 80 percent. So, acute homeowners can get off the hook sooner than expected.
It can take many years to reach the point where the principal is only 20% of the original loan amount, so it's important to know how your home has increased in value. After all, every bit of appreciation you've achieved over the years counts towards dismissing PMI. So why pay it after the balance of your loan has fallen below the 80% threshold? Even when nationwide trends hint at plunging home values, be aware that real estate is local. Your neighborhood might not be following the national trends and/or your home could have secured equity before things settled down.
A certified, licensed real estate appraiser can help home owners 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 understand the market dynamics of our area. At Ruffino Appraisal Group, LLC., we know when property values have risen or declined. We're masters at determining value trends in Margate, Broward County and surrounding areas. When faced with information from an appraiser, the mortgage company will generally do away with the PMI with little effort. 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: