Mark Schofield Appraisal Services can help you remove your Private Mortgage Insurance
It's widely known that a 20% down payment is accepted when purchasing a home. The lender's risk is often only the difference between the home value and the amount remaining on the loan, so the 20% supplies a nice cushion against the charges of foreclosure, selling the home again, and typical value variations on the chance that a purchaser doesn't pay.
The market was accepting down payments as low as 10, 5 and often 0 percent during the mortgage boom of the mid 2000s. A lender is able to endure the additional risk of the low down payment with Private Mortgage Insurance or PMI. This additional plan takes care of the lender in case a borrower defaults on the loan and the value of the property is lower than what the borrower still owes on 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 many times isn't even tax deductible. Unlike a piggyback loan where the lender consumes all the damages, PMI is favorable for the lender because they acquire the money, and they get paid if the borrower is unable to pay.
Does your monthly mortgage payment include PMI? Contact us, you may be able to save money by removing your PMI.
How can buyers refrain from bearing the cost of PMI?
The Homeowners Protection Act of 1998 makes the lenders on nearly all loans to automatically terminate the PMI when the principal balance of the loan equals 78 percent of the primary loan amount. The law pledges that, upon request of the home owner, the PMI must be released when the principal amount equals just 80 percent. So, smart homeowners can get off the hook sooner than expected.
Since it can take many years to reach the point where the principal is just 20% of the initial amount of the loan, it's important to know how your home has increased in value. After all, all of the appreciation you've accomplished over time counts towards dismissing PMI. So why pay it after your loan balance has dropped below the 80% mark? Your neighborhood might not be adopting the national trends and/or your home might have secured equity before things settled down, so even when nationwide trends signify plummeting home values, you should realize that real estate is local.
The hardest thing for almost all home owners to understand is just when their home's equity rises above the 20% point. An accredited, licensed real estate appraiser can surely help. As appraisers, it's our job to understand the market dynamics of our area. At Mark Schofield Appraisal Services , we're experts at identifying value trends in St Johns, Saint Johns County and surrounding areas, and we know when property values have risen or declined. When faced with information from an appraiser, the mortgage company will most often drop the PMI with little trouble. At which time, the homeowner can relish the savings from that point on.
Want to learn more about PMI and the Homeowners Protection Act? Click this link: