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Custom Appraisals can help you remove your Private Mortgage Insurance
When getting a mortgage, a 20% down payment is usually the standard.
The lender's only risk is typically just the remainder between the home value and the sum due on the loan, so the 20% provides a nice cushion against the charges of foreclosure, reselling the home, and natural value changes on the chance that a borrower is unable to pay.
The market was accepting down payments dropping to 10, 5 and frequently 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.
PMI guards the lender in case a borrower doesn't pay on the loan and the value of the home is less than what the borrower still owes on the loan.
Since the $40-$50 a month per $100,000 borrowed is compiled into the mortgage monthly payment and often isn't even tax deductible, PMI can be costly to a borrower.
It's beneficial 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 damages.
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Did you secure your mortgage with less than 20% down? Call Custom Appraisals today at 540-951-7350 to see if you can get rid of your Private Mortgage Insurance payment.
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How can home owners keep from bearing the expense of PMI?
The Homeowners Protection Act of 1998 makes the lenders on the majority of loans to automatically terminate the PMI when the principal balance of the loan reaches 78 percent of the primary loan amount.
Acute homeowners can get off the hook a little earlier. The law promises that, upon request of the homeowner, the PMI must be dropped when the principal amount reaches just 80 percent.
It can take many years to get to the point where the principal is only 80% of the original loan amount, so it's necessary to know how your Virginia home has appreciated in value.
After all, every bit of appreciation you've achieved over time counts towards dismissing PMI. So why should you pay it after your loan balance has fallen below the 80% mark?
Your neighborhood might not adhere to national trends and/or your home could have gained equity before things declined. So even when nationwide trends indicate declining home values, you should understand that real estate is local.
The toughest thing for almost all people to figure out is just when their home's equity goes over the 20% point. An accredited, Virginia licensed real estate appraiser can surely help.
As appraisers, it's our job to understand the market dynamics of our area.
At Custom Appraisals, we're experts at determining value trends in Blacksburg, Montgomery County, and surrounding areas, and we know when property values have risen or declined.
When faced with data from an appraiser, the mortgage company will most often drop the PMI with little effort. At which time, the homeowner can retain the savings from that point on.
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Does your monthly loan payment have a lineitem for PMI? Call Custom Appraisals today at 540-951-7350 or send us an e-mail. A current appraisal could save you thousands.
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Want to learn more about PMI and the Homeowners Protection Act? Click this link:
Cancellation of Private Mortgage Insurance: Federal Law May Save You Hundreds of Dollars Each Year
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