Have equity in your home? Want a lower payment? An appraisal from Capraro Appraisal Company, Inc. can help you get rid of your PMI.
When getting a mortgage, a 20% down payment is typically the standard. The lender's risk is often only the remainder between the home value and the sum due on the loan, so the 20% provides a nice buffer against the expenses of foreclosure, selling the home again, and regular value fluctuations in the event a purchaser doesn't pay.
During the recent mortgage upturn of the last decade, it became customary to see lenders taking down payments of 10, 5 or even 0 percent. How does a lender manage the additional risk of the low down payment? The solution is Private Mortgage Insurance or PMI. PMI protects the lender if a borrower is unable to pay on the loan and the worth of the home is less than the loan balance.
Since the $40-$50 a month per $100,000 borrowed is lumped into the mortgage payment and frequently isn't even tax deductible, PMI can be expensive to a borrower. It's advantageous for the lender because they obtain the money, and they get the money if the borrower doesn't pay, opposite from a piggyback loan where the lender takes in all the deficits.
Does your monthly mortgage payment include PMI? Contact us, you may be able to save money by removing your PMI.
How can a buyer keep from paying PMI?
With the utilization of The Homeowners Protection Act of 1998, on most loans lenders are required to automatically stop the PMI when the principal balance of the loan reaches 78 percent of the initial loan amount. The law pledges that, at the request of the homeowner, the PMI must be released when the principal amount reaches just 80 percent. So, acute homeowners 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 initial amount borrowed, so it's necessary to know how your home has increased in value. After all, any appreciation you've achieved over the years counts towards removing PMI. So why pay it after the balance of your loan has dropped below the 80% mark? Your neighborhood may not be adopting the national trends and/or your home might have gained equity before things calmed down, so even when nationwide trends predict declining home values, you should realize that real estate is local.
An accredited, licensed real estate appraiser can help home owners understand just when their home's equity goes over 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 Capraro Appraisal Company, Inc., we know when property values have risen or declined. We're experts at identifying value trends in North Providence, Providence County and surrounding areas. Faced with data from an appraiser, the mortgage company will usually do away with the PMI with little anxiety. At which time, the home owner can relish the savings from that point on.
Want to learn more about PMI and the Homeowners Protection Act? Click this link: