Let Collier Residential Appraisal, Inc. help you decide if you can cancel your PMIA 20% down payment is typically accepted when getting a mortgage. Considering the risk for the lender is generally only the remainder between the home value and the amount remaining on the loan, the 20% provides a nice cushion against the costs of foreclosure, selling the home again, and natural value changeson the chance that a borrower doesn't pay. During the recent mortgage boom of the last decade, it became customary to see lenders taking down payments of 10, 5 or often 0 percent. How does a lender endure the additional risk of the low down payment? The answer is Private Mortgage Insurance or PMI. PMI guards the lender if a borrower doesn't pay on the loan and the worth of the home is lower than the loan balance. Since the $40-$50 a month per $100,000 borrowed is lumped into the mortgage payment and often isn't even tax deductible, PMI can be pricey to a borrower. Different from a piggyback loan where the lender absorbs all the damages, PMI is favorable for the lender because they secure the money, and they get paid if the borrower defaults. 
Does your monthly mortgage payment include PMI? Contact us, you may be able to save money by removing your PMI. How buyers can refrain from bearing the expense of PMIWith the employment of The Homeowners Protection Act of 1998, on most loans lenders are forced to automatically eliminate the PMI when the principal balance of the loan equals 78 percent of the initial loan amount. The law states that, upon request of the home owner, the PMI must be released when the principal amount reaches just 80 percent. So, keen home owners can get off the hook ahead of time. It can take countless years to arrive at the point where the principal is only 20% of the original amount of the loan, so it's essential to know how your home has appreciated in value. After all, every bit of appreciation you've gained over the years counts towards removing PMI. So why should you pay it after the balance of your loan has dropped below the 80% mark? Despite the fact that nationwide trends signify decreasing home values, be aware that real estate is local. Your neighborhood may not be heeding the national trends and/or your home may have gained equity before things calmed down. An accredited, licensed real estate appraiser can help home owners understand just when their home's equity goes over the 20% point, as it's a difficult thing to know. It is an appraiser's job to know the market dynamics of their area. At Collier Residential Appraisal, Inc., we know when property values have risen or declined. We're experts at determining value trends in Naples, Collier County and surrounding areas. Faced with figures from an appraiser, the mortgage company will most often eliminate the PMI with little anxiety. At that time, the home owner can enjoy the savings from that point on.
Want to learn more about PMI and the Homeowners Protection Act? Click this link: |