Shamrock Appraisals, Inc. can help you remove your Private Mortgage Insurance
A 20% down payment is usually accepted when getting a mortgage. Since the liability for the lender is generally only the difference between the home value and the amount due on the loan, the 20% adds a nice buffer against the costs of foreclosure, selling the home again, and typical value changeson the chance that a purchaser is unable to pay.
Lenders were accepting down payments as low as 10, 5 and even 0 percent in the peak of last decade's mortgage boom. A lender is able to endure the additional risk of the small down payment with Private Mortgage Insurance or PMI. This added plan guards the lender if a borrower doesn't pay on the loan and the market price of the property is less than the loan balance.
PMI is pricey to a borrower in that the $40-$50 a month per $100,000 borrowed is rolled into the mortgage monthly payment and many times isn't even tax deductible. Unlike a piggyback loan where the lender absorbs all the losses, PMI is money-making for the lender because they acquire the money, and they get paid if the borrower is unable to pay.
Does your monthly mortgage payment include PMI? Contact us, you may be able to save money by removing your PMI.
How can a homeowner avoid paying PMI?
With the utilization of The Homeowners Protection Act of 1998, on most loans lenders are obligated to automatically stop the PMI when the principal balance of the loan reaches 78 percent of the beginning loan amount. Acute home owners can get off the hook a little earlier. The law pledges that, upon request of the home owner, the PMI must be released when the principal amount reaches only 80 percent.
It can take many years to arrive at the point where the principal is just 20% of the initial loan amount, so it's important to know how your home has increased in value. After all, any appreciation you've obtained over the years counts towards dismissing PMI. So why should you pay it after your loan balance has dropped below the 80% threshold? Despite the fact that nationwide trends hint at plummeting home values, realize that real estate is local. Your neighborhood might not be reflecting the national trends and/or your home could have secured equity before things cooled off.
The hardest thing for many home owners to know is just when their home's equity rises above the 20% point. A certified, licensed real estate appraiser can certainly help. It is an appraiser's job to recognize the market dynamics of their area. At Shamrock Appraisals, Inc., we're experts at analyzing value trends in Tuscaloosa, Tuscaloosa County and surrounding areas, and we know when property values have risen or declined. Faced with data from an appraiser, the mortgage company will usually drop the PMI with little effort. At which 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: