Have equity in your home? Want a lower payment? An appraisal from Citiwide Appraisal can help you get rid of your PMI.When buying a house, a 20% down payment is usually the standard. The lender's risk is often only the remainder between the home value and the balance outstanding on the loan, so the 20% supplies a nice cushion against the expenses of foreclosure, selling the home again, and regular value changes in the event a purchaser defaults.
The market was working with down payments dropping to 10, 5 and even 0 percent during the mortgage boom of the last decade. How does a lender handle the added risk of the small down payment? The solution is Private Mortgage Insurance or PMI. PMI covers the lender in case 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.
PMI can be pricey to a borrower on the grounds that the $40-$50 a month per $100,000 borrowed is lumped into the mortgage payment and many times isn't even tax deductible. It's money-making for the lender because they obtain the money, and they get the money if the borrower is unable to pay, in contrast to a piggyback loan where the lender takes in all the damages.
How homebuyers can keep from paying PMIAs a result of The Homeowners Protection Act of 1998, lenders are forced to automatically terminate the PMI when the principal balance of the loan equals 78 percent of the initial loan amount on nearly all loans. The law pledges that, at the request of the home owner, the PMI must be abandoned when the principal amount equals only 80 percent. So, keen home owners can get off the hook ahead of time.
Since it can take many years to reach the point where the principal is just 80% of the original amount of the loan, it's crucial to know how your Missouri home has grown in value. After all, any appreciation you've achieved over time counts towards dismissing PMI. So what's the reason for paying it after your loan balance has dropped below the 80% threshold? Even when nationwide trends forecast declining home values, be aware that real estate is local. Your neighborhood might not be minding the national trends and/or your home could have secured equity before things cooled off.
A certified, Missouri licensed real estate appraiser can help home owners figure out just when their home's equity rises above the 20% point, as it's a tough thing to know. It's an appraiser's job to know the market dynamics of their area. At Citiwide Appraisal, we know when property values have risen or declined. We're experts at pinpointing value trends in Kansas City, Clay County, and surrounding areas. Faced with data from an appraiser, the mortgage company will often cancel the PMI with little effort. At that time, the homeowner can enjoy the savings from that point on.
Want to learn more about PMI and the Homeowners Protection Act? Click this link: