Have equity in your home? Want a lower payment? An appraisal from Legg Appraisals can help you get rid of your PMI.A 20% down payment is typically the standard when purchasing a home. The lender's liability is oftentimes only the difference between the home value and the amount remaining on the loan, so the 20% supplies a nice buffer against the costs of foreclosure, selling the home again, and natural value variations in the event a borrower defaults. During the recent mortgage boom of the last decade, it was widespread to see lenders taking down payments of 10, 5 or often 0 percent. How does a lender handle the additional risk of the low down payment? The answer is Private Mortgage Insurance or PMI. PMI protects the lender in the event a borrower is unable to pay on the loan and the worth of the property is lower than the balance of the loan. PMI is costly to a borrower in that the $40-$50 a month per $100,000 borrowed is bundled into the mortgage payment and generally isn't even tax deductible. Contradictory to a piggyback loan where the lender absorbs all the losses, PMI is favorable for the lender because they acquire the money, and they receive payment if the borrower defaults. 
Does your monthly mortgage payment include PMI? Contact us, you may be able to save money by removing your PMI. How homeowners can keep from paying PMIWith the implementation of The Homeowners Protection Act of 1998, on nearly all loans lenders are obligated to automatically cease the PMI when the principal balance of the loan equals 78 percent of the beginning loan amount. Wise homeowners can get off the hook ahead of time. The law states that, upon request of the home owner, the PMI must be abandoned 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 amount borrowed, so it's important to know how your home has increased in value. After all, any appreciation you've accomplished over time counts towards dismissing PMI. So why pay it after your loan balance has fallen below the 80% threshold? Your neighborhood may not be adhering to the national trends and/or your home may have secured equity before things cooled off, so even when nationwide trends hint at declining home values, you should realize that real estate is local. The hardest thing for many homeowners to understand is just when their home's equity goes over the 20% point. An accredited, licensed real estate appraiser can surely help. It is an appraiser's job to understand the market dynamics of their area. At Legg Appraisals, we're masters at determining value trends in Montrose, Montrose County and surrounding areas, and we know when property values have risen or declined. Faced with figures from an appraiser, the mortgage company will generally cancel 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: |