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Let Greg Easter Appraisals LLC. help you figure out if you can eliminate your PMI
When purchasing a home, a 20% down payment is usually the standard.
Considering the risk for the lender is often only the remainder between the home value and the amount outstanding on the loan, the 20% supplies a nice cushion against the expenses of foreclosure, selling the home again, and natural value variations in the event a purchaser defaults.
During the recent mortgage boom that our country recently experienced, it was customary to see lenders only asking for down payments of 10, 5 or even 0 percent.
A lender is able to manage the added risk of the low down payment with Private Mortgage Insurance or PMI.
This added policy protects the lender in the event a borrower is unable to pay on the loan and the market price of the house is less than what the borrower still owes on the loan.
Because the $40-$50 a month per $100,000 borrowed is lumped into the mortgage monthly payment and frequently isn't even tax deductible, PMI is pricey to a borrower.
Separate from a piggyback loan where the lender takes in all the damages, PMI is beneficial for the lender because they secure the money, and they are covered if the borrower defaults.
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Is PMI a lineitem in your monthly house payment? Call Greg Easter Appraisals LLC. today at 205.979.3226 or send us an e-mail. Documentation of your home's current value could save you thousands.
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How buyers can refrain from bearing the expense of PMI
The Homeowners Protection Act of 1998 requires the lenders on nearly all loans to automatically eliminate the PMI when the principal balance of the loan equals 78 percent of the initial loan amount.
The law promises that, upon request of the homeowner, the PMI must be dropped when the principal amount reaches only 80 percent. So, savvy home owners can get off the hook ahead of time.
Considering it can take a significant number of years to reach the point where the principal is just 80% of the initial amount of the loan, it's necessary to know how your Alabama home has grown in value.
After all, any appreciation you've acquired over the years counts towards abolishing PMI. So what's the reason for paying it after your loan balance has dropped below the 80% threshold?
Even when nationwide trends indicate falling home values, understand that real estate is local. Your neighborhood may not be following the national trends and/or your home might have secured equity before things cooled off.
A certified, Alabama licensed real estate appraiser can help homeowners figure out just when their home's equity rises above the 20% point, as it's a tough thing to know.
Market dynamics and neighborhood-specific pricing trends are an appraiser's primary job!
At Greg Easter Appraisals LLC., we're masters at determining value trends in Birmingham, Jefferson County, and surrounding areas, and we know when property values have risen or declined.
Faced with information from an appraiser, the mortgage company will often remove the PMI with little trouble. At which time, the homeowner can relish the savings from that point on.
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The money you keep from getting rid of the PMI required when you got your mortgage will make up for the price of the appraisal in no time. Greg Easter Appraisals LLC. is in the business of tracking value trends in Birmingham and Jefferson County. Contact us today.
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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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