Laub Appraisal Company can help you remove your Private Mortgage Insurance
It's typically known that a 20% down payment is accepted when purchasing a home. Considering the risk for the lender is oftentimes only the difference between the home value and the sum due on the loan, the 20% adds a nice cushion against the expenses of foreclosure, reselling the home, and natural value changesin the event a borrower is unable to pay.
During the recent mortgage upturn of the last decade, it was widespread to see lenders requiring down payments of 10, 5 or often 0 percent. A lender is able to endure the increased risk of the small down payment with Private Mortgage Insurance or PMI. This added plan protects the lender in case a borrower defaults on the loan and the value of the home is lower than what the borrower still owes on the loan.
Since the $40-$50 a month per $100,000 borrowed is rolled into the mortgage monthly payment and generally isn't even tax deductible, PMI can be pricey to a borrower. Unlike a piggyback loan where the lender consumes all the damages, PMI is profitable for the lender because they obtain the money, and they receive payment 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 home owners can avoid paying PMI
With the utilization of The Homeowners Protection Act of 1998, on most loans lenders are forced to automatically cease the PMI when the principal balance of the loan reaches 78 percent of the primary loan amount. The law promises that, upon request of the homeowner, the PMI must be released when the principal amount reaches only 80 percent. So, smart 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 original amount of the loan, so it's important to know how your home has appreciated in value. After all, every bit of appreciation you've acquired over the years counts towards removing PMI. So why pay it after your loan balance has fallen below the 80% mark? Your neighborhood might not be minding the national trends and/or your home might have gained equity before things simmered down, so even when nationwide trends indicate falling home values, you should understand that real estate is local.
A certified, licensed real estate appraiser can help home owners understand just when their home's equity rises above the 20% point, as it's a hard thing to know. As appraisers, it's our job to know the market dynamics of our area. At Laub Appraisal Company, we're experts at recognizing value trends in Columbia, Richland 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 often do away with the PMI with little effort. At that time, the homeowner can delight in the savings from that point on.
Want to learn more about PMI and the Homeowners Protection Act? Click this link: