Let Property Valuation Group help you learn if you can cancel your PMIIt's widely understood that a 20% down payment is common when getting a mortgage. Because the liability for the lender is usually only the difference between the home value and the amount due on the loan, the 20% supplies a nice cushion against the expenses of foreclosure, reselling the home, and typical value variationson the chance that a borrower is unable to pay. During the recent mortgage boom of the last decade, it was widespread to see lenders commanding down payments of 10, 5 or often 0 percent. How does a lender endure the added risk of the small down payment? The answer is Private Mortgage Insurance or PMI. This supplemental plan guards the lender if a borrower doesn't pay on the loan and the market price of the house is less than the loan balance. PMI can be costly to a borrower on the grounds that the $40-$50 a month per $100,000 borrowed is lumped into the mortgage monthly payment and generally 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 defaults, separate from a piggyback loan where the lender absorbs 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 a buyer prevent bearing the cost of PMI?The Homeowners Protection Act of 1998 obligates the lenders on most loans to automatically cease the PMI when the principal balance of the loan equals 78 percent of the beginning loan amount. The law stipulates that, at the request of the home owner, the PMI must be abandoned when the principal amount reaches just 80 percent. So, savvy homeowners can get off the hook sooner than expected. Considering it can take many years to arrive at the point where the principal is only 20% of the original loan amount, it's important to know how your home has grown in value. After all, every bit of appreciation you've gained over time counts towards removing PMI. So why should you pay it after the balance of your loan has fallen below the 80% threshold? Even when nationwide trends signify plummeting home values, be aware that real estate is local. Your neighborhood may not be adhering to the national trends and/or your home may have gained equity before things settled down. The toughest thing for most homeowners to understand is just when their home's equity rises above the 20% point. A certified, licensed real estate appraiser can surely help. As appraisers, it's our job to know the market dynamics of our area. At Property Valuation Group, we know when property values have risen or declined. We're experts at pinpointing value trends in Ferndale, Oakland County and surrounding areas. When faced with figures from an appraiser, the mortgage company will most often remove the PMI with little effort. At that time, the home owner can delight in the savings from that point on.
Want to learn more about PMI and the Homeowners Protection Act? Click this link: |