Personal Service Realty's Residential Valuation Group can help you remove your Private Mortgage Insurance
It's generally known that a 20% down payment is accepted when purchasing a home. Because the liability for the lender is often only the difference between the home value and the sum remaining on the loan, the 20% provides a nice buffer against the charges of foreclosure, selling the home again, and natural value changesin the event a purchaser is unable to pay.
The market was accepting down payments down to 10, 5 and even 0 percent in the peak of last decade's mortgage boom. How does a lender endure the added risk of the low down payment? The solution is Private Mortgage Insurance or PMI. This added policy protects the lender in case a borrower defaults on the loan and the worth of the house is less than what the borrower still owes on the loan.
PMI can be expensive to a borrower because the $40-$50 a month per $100,000 borrowed is rolled into the mortgage monthly payment and many times isn't even tax deductible. It's money-making for the lender because they secure the money, and they get paid if the borrower defaults, unlike 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 can homeowners prevent paying PMI?
The Homeowners Protection Act of 1998 requires the lenders on nearly all loans to automatically cease the PMI when the principal balance of the loan reaches 78 percent of the beginning loan amount. Smart homeowners can get off the hook sooner than expected. The law states that, upon request of the home owner, the PMI must be abandoned when the principal amount reaches just 80 percent.
It can take countless years to reach the point where the principal is only 20% of the original loan amount, so it's necessary to know how your home has grown in value. After all, any appreciation you've achieved over time counts towards removing PMI. So why pay it after the balance of your loan has fallen below the 80% mark? Despite the fact that nationwide trends predict decreasing home values, realize that real estate is local. Your neighborhood might not be following the national trends and/or your home could have secured equity before things simmered down.
The toughest thing for many homeowners to know is just when their home's equity goes over the 20% point. An accredited, licensed real estate appraiser can certainly help. As appraisers, it's our job to recognize the market dynamics of our area. At Personal Service Realty's Residential Valuation Group, we know when property values have risen or declined. We're masters at analyzing value trends in Jacksonville, Duval County and surrounding areas. Faced with information from an appraiser, the mortgage company will most often drop the PMI with little anxiety. At which time, the home owner can delight in the savings from that point on.
Want to learn more about PMI and the Homeowners Protection Act? Click this link:
Would you like to save money by not having to pay for Private Mortgage Insurance? We can help. Simply fill out the form below as completely as possible and we'll send you information on how to save PMI expenses, with no obligation to you. We guarantee your privacy.