Let Mark Schofield Appraisal Services help you decide if you can get rid of your PMIIt's typically inferred that a 20% down payment is common when getting a mortgage. The lender's liability is generally only the difference between the home value and the amount due on the loan, so the 20% adds a nice buffer against the charges of foreclosure, selling the home again, and regular value changes in the event a borrower defaults. Banks were accepting 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 endure the additional risk of the low down payment with Private Mortgage Insurance or PMI. PMI covers the lender if a borrower doesn't pay on the loan and the worth of the house is lower than the loan balance. Because the $40-$50 a month per $100,000 borrowed is lumped into the mortgage payment and generally isn't even tax deductible, PMI is pricey to a borrower. It's money-making for the lender because they obtain the money, and they get paid if the borrower doesn't pay, separate from a piggyback loan where the lender consumes all the costs. 
Does your monthly mortgage payment include PMI? Contact us, you may be able to save money by removing your PMI. How can homebuyers prevent bearing the cost of PMI?The Homeowners Protection Act of 1998 forces the lenders on most loans to automatically stop the PMI when the principal balance of the loan reaches 78 percent of the primary loan amount. The law states that, at the request of the homeowner, the PMI must be abandoned when the principal amount reaches just 80 percent. So, wise homeowners can get off the hook a little earlier. It can take countless years to get to the point where the principal is just 20% of the original amount of the loan, so it's necessary to know how your home has increased in value. After all, every bit of appreciation you've achieved over the years counts towards removing PMI. So what's the reason for paying it after the balance of your loan has dropped below the 80% mark? Despite the fact that nationwide trends signify falling home values, be aware that real estate is local. Your neighborhood might not be following the national trends and/or your home might have acquired equity before things cooled off. A certified, licensed real estate appraiser can help home owners understand just when their home's equity goes over the 20% point, as it's a hard thing to know. As appraisers, it's our job to understand the market dynamics of our area. At Mark Schofield Appraisal Services , we know when property values have risen or declined. We're masters at recognizing value trends in St Johns, Saint Johns County and surrounding areas. Faced with information from an appraiser, the mortgage company will generally eliminate the PMI with little effort. 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: |