Capraro Appraisal Company, Inc. can help you remove your Private Mortgage Insurance
When buying a house, a 20% down payment is typically the standard. Since the liability for the lender is usually only the difference between the home value and the amount remaining on the loan, the 20% provides a nice buffer against the charges of foreclosure, selling the home again, and typical value fluctuationsin the event a borrower doesn't pay.
During the recent mortgage upturn of the last decade, it was widespread to see lenders commanding down payments of 10, 5 or often 0 percent. A lender is able to handle the added risk of the low down payment with Private Mortgage Insurance or PMI. This additional policy guards the lender if a borrower doesn't pay on the loan and the market price of the home is less than what the borrower still owes on the loan.
Because the $40-$50 a month per $100,000 borrowed is lumped into the mortgage payment and oftentimes isn't even tax deductible, PMI can be expensive to a borrower. It's profitable for the lender because they secure the money, and they receive payment if the borrower defaults, contradictory to a piggyback loan where the lender absorbs all the costs.
Does your monthly mortgage payment include PMI? Contact us, you may be able to save money by removing your PMI.
How home buyers can keep from bearing the expense of PMI
With the employment of The Homeowners Protection Act of 1998, on nearly all loans lenders are obligated to automatically stop the PMI when the principal balance of the loan equals 78 percent of the beginning loan amount. The law guarantees that, upon request of the home owner, the PMI must be abandoned when the principal amount equals just 80 percent. So, wise home owners can get off the hook ahead of time.
It can take countless years to arrive at the point where the principal is only 20% of the original loan amount, so it's essential to know how your home has grown in value. After all, any appreciation you've gained over time counts towards dismissing PMI. So why pay it after your loan balance has fallen below the 80% mark? Even when nationwide trends signify plummeting home values, realize that real estate is local. Your neighborhood may not be adopting the national trends and/or your home may have gained equity before things simmered down.
The difficult thing for most home owners to understand is just when their home's equity rises above the 20% point. An accredited, licensed real estate appraiser can definitely help. It is an appraiser's job to understand the market dynamics of their area. At Capraro Appraisal Company, Inc., we're experts at determining value trends in North Providence, Providence County and surrounding areas, and we know when property values have risen or declined. When faced with figures from an appraiser, the mortgage company will most often 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: