Have equity in your home? Want a lower payment? An appraisal from Tober Residential Valuation, LLC can help you get rid of your PMI.
When buying a house, a 20% down payment is usually the standard. Since the risk for the lender is usually only the difference between the home value and the sum due on the loan, the 20% provides a nice buffer against the charges of foreclosure, reselling the home, and typical value variationsin the event a purchaser doesn't pay.
The market was accepting down payments as low as 10, 5 and even 0 percent in the peak of last decade's mortgage boom. How does a lender manage the increased risk of the low down payment? The answer is Private Mortgage Insurance or PMI. PMI protects the lender in the event a borrower defaults on the loan and the value of the property is lower than the loan balance.
PMI is pricey to a borrower on the grounds that the $40-$50 a month per $100,000 borrowed is compiled into the mortgage monthly payment and frequently isn't even tax deductible. It's beneficial for the lender because they secure the money, and they receive payment if the borrower defaults, unlike a piggyback loan where the lender consumes all the deficits.
Does your monthly mortgage payment include PMI? Contact us, you may be able to save money by removing your PMI.
How can homeowners avoid bearing the expense of PMI?
The Homeowners Protection Act of 1998 makes the lenders on nearly all loans to automatically stop the PMI when the principal balance of the loan reaches 78 percent of the initial loan amount. Acute homeowners can get off the hook sooner than expected. The law pledges that, upon request of the homeowner, the PMI must be dropped when the principal amount reaches just 80 percent.
Considering it can take countless years to arrive at the point where the principal is just 20% of the original amount borrowed, it's important to know how your home has increased in value. After all, any appreciation you've achieved over the years counts towards abolishing PMI. So why should you pay it after the balance of your loan has dropped below the 80% mark? Your neighborhood may not be heeding the national trends and/or your home could have acquired equity before things calmed down, so even when nationwide trends hint at plummeting home values, you should realize that real estate is local.
The difficult thing for most homeowners to know is just when their home's equity rises above the 20% point. A certified, licensed real estate appraiser can certainly help. As appraisers, it's our job to keep up with the market dynamics of our area. At Tober Residential Valuation, LLC, we know when property values have risen or declined. We're experts at identifying value trends in Denver, Denver County and surrounding areas. When faced with information from an appraiser, the mortgage company will most often remove the PMI with little trouble. At which time, the home owner can relish the savings from that point on.
Want to learn more about PMI and the Homeowners Protection Act? Click this link: