Have equity in your home? Want a lower payment? An appraisal from Tristate Appraisers, LLC. can help you get rid of your PMI.A 20% down payment is typically accepted when purchasing a home. Because the risk for the lender is generally only the remainder between the home value and the amount due on the loan, the 20% provides a nice cushion against the expenses of foreclosure, reselling the home, and natural value changes in the event a borrower defaults.
Lenders were accepting down payments as low as 10, 5 and often 0 percent during the mortgage boom of the last decade. A lender is able to manage the increased risk of the reduced down payment with Private Mortgage Insurance or PMI. PMI takes care of the lender if a borrower doesn't pay on the loan and the market price of the home is lower than the loan balance.
PMI can be expensive to a borrower because the $40-$50 a month per $100,000 borrowed is lumped into the mortgage monthly payment and frequently isn't even tax deductible. Different from a piggyback loan where the lender takes in all the costs, PMI is money-making for the lender because they collect the money, and they are covered if the borrower defaults.
How can home owners refrain from bearing the expense of PMI?The Homeowners Protection Act of 1998 forces the lenders on nearly all loans to automatically cancel the PMI when the principal balance of the loan equals 78 percent of the beginning loan amount. Savvy home owners can get off the hook sooner than expected. The law pledges that, at the request of the home owner, the PMI must be released when the principal amount reaches just 80 percent.
Considering it can take several years to arrive at the point where the principal is just 80% of the original loan amount, it's necessary to know how your Florida home has appreciated in value. After all, any appreciation you've achieved over the years counts towards dismissing PMI. So what's the reason for paying it after the balance of your loan has fallen below the 80% mark? Your neighborhood might not conform to national trends and/or your home might have secured equity before the economy cooled off. So even when nationwide trends hint at declining home values, you should realize that real estate is local.
An accredited, Florida licensed real estate appraiser can help home owners figure out if their equity has exceeed the 20% point, as it's a hard thing to know. It is an appraiser's job to know the market dynamics of their area. At Tristate Appraisers, LLC., we're experts at recognizing value trends in Destin, Okaloosa County, and surrounding areas, and we know when property values have risen or declined. Faced with information from an appraiser, the mortgage company will most often cancel the PMI with little effort. At that time, the home owner can retain the savings from that point on.
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