Let James Earp Appraisal Service help you discover if you can eliminate your PMIIt's widely understood that a 20% down payment is common when getting a mortgage. The lender's risk is oftentimes only the difference between the home value and the amount outstanding on the loan, so the 20% provides a nice buffer against the costs of foreclosure, selling the home again, and regular value variations on the chance that a borrower doesn't pay. The market was taking down payments as low as 10, 5 and often 0 percent in the peak of last decade's mortgage boom. A lender is able to manage the additional risk of the small down payment with Private Mortgage Insurance or PMI. PMI protects the lender if a borrower is unable to pay on the loan and the value of the house is less than what the borrower still owes on the loan. PMI can be pricey to a borrower because the $40-$50 a month per $100,000 borrowed is bundled into the mortgage monthly payment and many times isn't even tax deductible. It's advantageous for the lender because they secure the money, and they get paid if the borrower defaults, separate from a piggyback loan where the lender takes in 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 owners can avoid bearing the expense of PMIThe Homeowners Protection Act of 1998 requires the lenders on most loans to automatically terminate the PMI when the principal balance of the loan reaches 78 percent of the initial loan amount. The law promises that, at the request of the home owner, the PMI must be dropped when the principal amount reaches only 80 percent. So, wise home owners can get off the hook a little earlier. It can take countless years to reach the point where the principal is just 20% of the initial amount of the loan, so it's crucial to know how your home has grown in value. After all, every bit of appreciation you've gained over the years counts towards abolishing PMI. So why should you pay it after your loan balance has dropped below the 80% threshold? Your neighborhood may not be heeding the national trends and/or your home might have secured equity before things simmered down, so even when nationwide trends signify falling home values, you should realize that real estate is local. A certified, licensed real estate appraiser can help homeowners understand just when their home's equity rises above the 20% point, as it's a hard thing to know. It's an appraiser's job to keep up with the market dynamics of their area. At James Earp Appraisal Service, we know when property values have risen or declined. We're masters at identifying value trends in Raleigh, Wake County and surrounding areas. When faced with data from an appraiser, the mortgage company will often cancel the PMI with little trouble. At that time, the home owner can retain the savings from that point on.
Want to learn more about PMI and the Homeowners Protection Act? Click this link: |