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Let Tristate Appraisers help you figure out if you can cancel your PMIA 20% down payment is usually accepted when getting a mortgage. Because the risk 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 expenses of foreclosure, selling the home again, and natural value fluctuations in the event a purchaser defaults.
During the recent mortgage upturn that our country recently experienced, it was customary to see lenders only asking for down payments of 10, 5 or often 0 percent. A lender is able to manage the additional risk of the reduced down payment with Private Mortgage Insurance or PMI. PMI takes care of the lender if a borrower defaults on the loan and the market price of the house is lower than the balance of the loan.
PMI can be pricey to a borrower in that the $40-$50 a month per $100,000 borrowed is compiled into the mortgage monthly payment and on many occasions isn't even tax deductible. It's favorable for the lender because they collect the money, and they receive payment if the borrower doesn't pay, unlike a piggyback loan where the lender absorbs all the deficits.
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Did you have less than 20% to put down on your mortgage? Contact Tristate Appraisers today at 8506505557 to see if you can save money by removing your Private Mortgage Insurance payment. |
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How can homeowners avoid paying PMI? The Homeowners Protection Act of 1998 forces the lenders on nearly all loans to automatically terminate the PMI when the principal balance of the loan equals 78 percent of the initial loan amount. Savvy homeowners can get off the hook ahead of time. The law designates that, at the request of the home owner, the PMI must be abandoned when the principal amount equals just 80 percent.
Since it can take many years to reach the point where the principal is only 80% of the original loan amount, it's necessary to know how your Florida home has appreciated in value. After all, all of the appreciation you've accomplished over time counts towards abolishing PMI. So why pay it after the balance of your loan has fallen below the 80% threshold? Even when nationwide trends indicate falling home values, understand that real estate is local. Your neighborhood might not be reflecting the national trends and/or your home may have acquired equity before things simmered down.
The difficult thing for almost all homeowners to figure out is whether their home equity has exceeded the 20% point. A certified, Florida licensed real estate appraiser can surely help. It is an appraiser's job to know the market dynamics of their area. At Tristate Appraisers, we're experts at pinpointing value trends in Destin, Okaloosa 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 drop the PMI with little effort. At that time, the homeowner can relish the savings from that point on.
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Does your monthly loan payment include a fee for PMI? Call Tristate Appraisers today at 8506505557 or send us an e-mail. A new appraisal could save you thousands. |
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Want to learn more about PMI and the Homeowners Protection Act? Click this link:
Cancellation of Private Mortgage Insurance: Federal Law May Save You Hundreds of Dollars Each Year
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