Have equity in your home? Want a lower payment? An appraisal from Race Appraisal Services, LLC can help you get rid of your PMI.It's typically known that a 20% down payment is accepted when buying a house. Because the risk for the lender is oftentimes only the difference between the home value and the amount outstanding on the loan, the 20% supplies a nice cushion against the charges of foreclosure, reselling the home, and regular value fluctuationsin the event a borrower is unable to pay. Lenders were working with down payments down to 10, 5 and often 0 percent during the mortgage boom of the last decade. How does a lender handle the increased risk of the low down payment? The answer is Private Mortgage Insurance or PMI. PMI protects the lender in the event a borrower doesn't pay on the loan and the worth of the house is lower than the loan balance. PMI can be expensive to a borrower because the $40-$50 a month per $100,000 borrowed is lumped into the mortgage payment and generally isn't even tax deductible. It's lucrative for the lender because they obtain the money, and they get paid if the borrower defaults, different from a piggyback loan where the lender takes in all the deficits. ![]() Does your monthly mortgage payment include PMI? Contact us, you may be able to save money by removing your PMI. How can a home owner prevent bearing the cost of PMI?With the utilization of The Homeowners Protection Act of 1998, on nearly all loans lenders are required to automatically eliminate the PMI when the principal balance of the loan reaches 78 percent of the initial loan amount. The law guarantees that, at the request of the home owner, the PMI must be released when the principal amount reaches only 80 percent. So, keen home owners can get off the hook a little early. It can take many years to get to the point where the principal is just 20% of the original loan amount, so it's essential to know how your home has increased in value. After all, all of the appreciation you've acquired over time counts towards abolishing PMI. So why pay it after your loan balance has dropped below the 80% mark? Even when nationwide trends forecast falling home values, realize that real estate is local. Your neighborhood might not be minding the national trends and/or your home may have secured equity before things cooled off. The toughest thing for almost all homeowners to understand is just when their home's equity rises above the 20% point. An accredited, licensed real estate appraiser can surely help. As appraisers, it's our job to understand the market dynamics of our area. At Race Appraisal Services, LLC, we know when property values have risen or declined. We're masters at recognizing value trends in East Longmeadow, Hampden County and surrounding areas. Faced with information from an appraiser, the mortgage company will usually eliminate the PMI with little effort. At which time, the home owner can delight in the savings from that point on.
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Paying PMI?
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