Have equity in your home? Want a lower payment? An appraisal from ENH Appraisal LLC can help you get rid of your PMI.
It's typically known that a 20% down payment is accepted when getting a mortgage. Since the liability for the lender is oftentimes only the difference between the home value and the sum outstanding on the loan, the 20% adds a nice buffer against the expenses of foreclosure, selling the home again, and regular value changeson the chance that a borrower doesn't pay.
The market was taking down payments down to 10, 5 and often 0 percent during the mortgage boom of the last decade. How does a lender endure the additional risk of the low down payment? The solution is Private Mortgage Insurance or PMI. PMI takes care of the lender in the event a borrower defaults on the loan and the worth of the home is lower than the loan balance.
PMI is costly to a borrower on the grounds that the $40-$50 a month per $100,000 borrowed is compiled into the mortgage monthly payment and oftentimes isn't even tax deductible. It's money-making for the lender because they secure the money, and they get paid if the borrower doesn't pay, different from a piggyback loan where the lender absorbs all the deficits.
Does your monthly mortgage payment include PMI? Contact us, you may be able to save money by removing your PMI.
How homebuyers can keep from paying PMI
With the utilization of The Homeowners Protection Act of 1998, on nearly all loans lenders are forced to automatically eliminate the PMI when the principal balance of the loan reaches 78 percent of the beginning loan amount. The law designates that, upon request of the home owner, the PMI must be abandoned when the principal amount reaches just 80 percent. So, keen homeowners can get off the hook ahead of time.
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 grown in value. After all, every bit of appreciation you've obtained over the years counts towards abolishing PMI. So why should you pay it after the balance of your loan has fallen below the 80% threshold? Even when nationwide trends predict decreasing home values, be aware that real estate is local. Your neighborhood may not be following the national trends and/or your home may have secured equity before things cooled off.
The hardest thing for almost all homeowners to know is just when their home's equity rises above the 20% point. An accredited, licensed real estate appraiser can definitely help. As appraisers, it's our job to know the market dynamics of our area. At ENH Appraisal LLC, we're experts at determining value trends in Rochester, Strafford 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 most often remove the PMI with little anxiety. At that time, the home owner can retain the savings from that point on.
Want to learn more about PMI and the Homeowners Protection Act? Click this link: