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 usually the standard. Considering the risk for the lender is oftentimes only the remainder between the home value and the sum remaining on the loan, the 20% provides a nice buffer against the charges of foreclosure, selling the home again, and natural value changeson the chance that a purchaser doesn't pay.
During the recent mortgage upturn of the mid 2000s, it became customary to see lenders requiring down payments of 10, 5 or even 0 percent. A lender is able to endure the increased risk of the minimal down payment with Private Mortgage Insurance or PMI. This added plan covers the lender if a borrower is unable to pay on the loan and the value of the home is lower than the loan balance.
Since the $40-$50 a month per $100,000 borrowed is bundled into the mortgage monthly payment and frequently isn't even tax deductible, PMI is pricey to a borrower. It's profitable for the lender because they collect the money, and they get paid if the borrower doesn't pay, opposite from a piggyback loan where the lender consumes all the costs.
Does your monthly mortgage payment include PMI? Contact us, you may be able to save money by removing your PMI.
How can home buyers keep from bearing the expense of PMI?
The Homeowners Protection Act of 1998 requires the lenders on nearly all loans to automatically cancel the PMI when the principal balance of the loan reaches 78 percent of the initial loan amount. The law guarantees that, upon request of the homeowner, the PMI must be abandoned when the principal amount equals just 80 percent. So, smart homeowners can get off the hook ahead of time.
Because it can take countless years to get to the point where the principal is only 20% of the initial amount borrowed, it's essential to know how your home has grown in value. After all, every bit of appreciation you've accomplished over time counts towards removing PMI. So why should you pay it after your loan balance has dropped below the 80% mark? Even when nationwide trends forecast plunging home values, understand that real estate is local. Your neighborhood might not be heeding the national trends and/or your home may have gained equity before things cooled off.
An accredited, licensed real estate appraiser can help home owners understand just when their home's equity rises above the 20% point, as it's a hard thing to know. As appraisers, it's our job to recognize the market dynamics of our area. At Ruffino Appraisal Group, LLC., we know when property values have risen or declined. We're experts at recognizing value trends in Margate, Broward County and surrounding areas. Faced with information from an appraiser, the mortgage company will usually remove the PMI with little trouble. At that 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: