Judge Appraisal can help you remove your Private Mortgage Insurance
When purchasing a home, a 20% down payment is usually the standard. Since the liability for the lender is usually only the difference between the home value and the amount due on the loan, the 20% supplies a nice buffer against the charges of foreclosure, selling the home again, and natural value fluctuationson the chance that a purchaser defaults.
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 endure the added risk of the low down payment with Private Mortgage Insurance or PMI. This added policy protects the lender in the event a borrower is unable to pay on the loan and the value of the property is less than the balance of the loan.
PMI can be pricey to a borrower on the grounds that the $40-$50 a month per $100,000 borrowed is rolled into the mortgage monthly payment and frequently isn't even tax deductible. It's lucrative for the lender because they collect the money, and they receive payment if the borrower doesn't pay, opposite from a piggyback loan where the lender absorbs 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 refrain from paying PMI?
The Homeowners Protection Act of 1998 forces the lenders on nearly all loans to automatically eliminate the PMI when the principal balance of the loan equals 78 percent of the beginning loan amount. The law designates that, upon request of the homeowner, the PMI must be abandoned when the principal amount reaches just 80 percent. So, smart home owners can get off the hook sooner than expected.
Considering it can take many years to reach the point where the principal is just 20% of the original amount borrowed, it's essential to know how your home has increased in value. After all, all of the appreciation you've accomplished over the years counts towards dismissing PMI. So why pay it after your loan balance has fallen below the 80% threshold? Despite the fact that nationwide trends forecast declining home values, realize that real estate is local. Your neighborhood may not be adopting the national trends and/or your home could have secured equity before things settled down.
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 difficult thing to know. As appraisers, it's our job to understand the market dynamics of our area. At Judge Appraisal, we know when property values have risen or declined. We're experts at pinpointing value trends in Southern California, Riverside County and surrounding areas. Faced with information from an appraiser, the mortgage company will usually cancel the PMI with little anxiety. At that time, the home owner can enjoy the savings from that point on.
Want to learn more about PMI and the Homeowners Protection Act? Click this link: