Have equity in your home? Want a lower payment? An appraisal from Jensen Appraisals Inc can help you get rid of your PMI.A 20% down payment is typically the standard when getting a mortgage. Because the risk for the lender is often only the remainder between the home value and the sum remaining on the loan, the 20% supplies a nice cushion against the expenses of foreclosure, reselling the home, and regular value fluctuations in the event a purchaser is unable to pay.
The market was taking down payments dropping to 10, 5 and often 0 percent in the peak of last decade's mortgage boom. A lender is able to handle the increased risk of the low down payment with Private Mortgage Insurance or PMI. This additional plan covers the lender if a borrower doesn't pay on the loan and the value of the home is less than what is owed on the loan.
PMI can be costly to a borrower because the $40-$50 a month per $100,000 borrowed is rolled into the mortgage payment and oftentimes isn't even tax deductible. Different from a piggyback loan where the lender consumes all the costs, PMI is favorable for the lender because they obtain the money, and they get the money if the borrower is unable to pay.
How homeowners can keep from bearing the expense of PMIWith the implementation of The Homeowners Protection Act of 1998, lenders are forced to automatically cease the PMI when the principal balance of the loan reaches 78 percent of the original loan amount on most loans. The law designates that, at the request of the homeowner, the PMI must be abandoned when the principal amount equals just 80 percent. So, savvy homeowners can get off the hook ahead of time.
It can take many years to reach the point where the principal is just 80% of the initial loan amount, so it's important to know how your Florida home has increased in value. After all, all of the appreciation you've obtained over time counts towards dismissing PMI. So what's the reason for paying it after the balance of your loan has dropped below the 80% mark? Your neighborhood may not follow national trends and/or your home may have acquired equity before things declined. So even when nationwide trends forecast falling home values, you should know most importantly that real estate is local.
An accredited, Florida licensed real estate appraiser can help home owners figure out just when their home's equity goes over the 20% point, as it's a difficult thing to know. It is an appraiser's job to know the market dynamics of their area. At Jensen Appraisals Inc, we know when property values have risen or declined. We're experts at analyzing value trends in Palm Beach Gardens, Palm Beach County, and surrounding areas. When faced with data from an appraiser, the mortgage company will usually eliminate the PMI with little anxiety. 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:
Cancellation of Private Mortgage Insurance: Federal Law May Save You Hundreds of Dollars Each Year