REVARI (Real Estate Valuation and Research Inc.) can help you remove your Private Mortgage Insurance
It's generally known that a 20% down payment is accepted when getting a mortgage. The lender's risk is usually only the difference between the home value and the amount remaining on the loan, so the 20% provides a nice buffer against the expenses of foreclosure, selling the home again, and regular value changes on the chance that a purchaser defaults.
The market was working with down payments as low as 10, 5 and often 0 percent during the mortgage boom of the mid 2000s. A lender is able to handle the increased risk of the low down payment with Private Mortgage Insurance or PMI. This supplementary plan takes care of the lender in the event a borrower is unable to pay on the loan and the value of the house is lower than the loan balance.
PMI is costly to a borrower because the $40-$50 a month per $100,000 borrowed is compiled into the mortgage payment and often isn't even tax deductible. It's advantageous for the lender because they acquire the money, and they get the money if the borrower defaults, unlike 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 home buyer refrain from bearing the cost of PMI?
With the employment of The Homeowners Protection Act of 1998, on nearly all loans lenders are forced to automatically cease the PMI when the principal balance of the loan reaches 78 percent of the beginning loan amount. Keen home owners can get off the hook ahead of time. The law promises that, upon request of the home owner, the PMI must be released when the principal amount equals just 80 percent.
It can take countless years to reach the point where the principal is only 20% of the initial amount borrowed, so it's crucial to know how your home has grown in value. After all, any 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% threshold? Even when nationwide trends indicate declining home values, realize that real estate is local. Your neighborhood might not be adhering to the national trends and/or your home might have secured equity before things calmed down.
The toughest thing for many homeowners to understand is just when their home's equity goes over the 20% point. A certified, licensed real estate appraiser can certainly help. It is an appraiser's job to understand the market dynamics of their area. At REVARI (Real Estate Valuation and Research Inc.), we know when property values have risen or declined. We're experts at recognizing value trends in Claremont, Sullivan County and surrounding areas. Faced with information from an appraiser, the mortgage company will generally drop 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:
Would you like to save money by not having to pay for Private Mortgage Insurance? We can help. Simply fill out the form below as completely as possible and we'll send you information on how to save PMI expenses, with no obligation to you. We guarantee your privacy.