Mike Noble Appraisals can help you remove your Private Mortgage InsuranceA 20% down payment is usually the standard when getting a mortgage. The lender's liability is usually only the remainder between the home value and the amount due on the loan, so the 20% supplies a nice cushion against the charges of foreclosure, selling the home again, and regular value variations in the event a borrower defaults. The market was taking 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 added risk of the small down payment? The answer is Private Mortgage Insurance or PMI. PMI takes care of the lender if a borrower defaults on the loan and the value of the property is lower than the balance of the loan. PMI is pricey to a borrower in that the $40-$50 a month per $100,000 borrowed is bundled into the mortgage monthly payment and often isn't even tax deductible. It's profitable for the lender because they acquire the money, and they get the money if the borrower defaults, different from a piggyback loan where the lender consumes all the losses. 
Does your monthly mortgage payment include PMI? Contact us, you may be able to save money by removing your PMI. How can buyers prevent bearing the cost of PMI?With the utilization of The Homeowners Protection Act of 1998, on nearly all loans lenders are forced to automatically terminate the PMI when the principal balance of the loan reaches 78 percent of the beginning loan amount. The law guarantees that, upon request of the home owner, the PMI must be released when the principal amount equals just 80 percent. So, keen home owners can get off the hook sooner than expected. It can take many years to reach the point where the principal is only 20% of the original loan amount, so it's essential to know how your home has appreciated in value. After all, all of the appreciation you've accomplished over the years counts towards dismissing PMI. So why pay it after your loan balance has dropped below the 80% mark? Even when nationwide trends indicate decreasing home values, understand that real estate is local. Your neighborhood might not be reflecting the national trends and/or your home could have secured equity before things calmed down. An accredited, licensed real estate appraiser can help homeowners understand just when their home's equity rises above the 20% point, as it's a difficult thing to know. It's an appraiser's job to know the market dynamics of their area. At Mike Noble Appraisals, we're experts at determining value trends in Montgomery, Elmore County and surrounding areas, and we know when property values have risen or declined. When faced with information from an appraiser, the mortgage company will often cancel the PMI with little trouble. At which time, the homeowner can retain the savings from that point on.
Want to learn more about PMI and the Homeowners Protection Act? Click this link: |