SafeValues Inc. can help you remove your Private Mortgage Insurance
When getting a mortgage, a 20% down payment is typically the standard. Because the liability for the lender is generally only the remainder between the home value and the amount outstanding on the loan, the 20% supplies a nice cushion against the expenses of foreclosure, selling the home again, and typical value changeson the chance that a purchaser doesn't pay.
During the recent mortgage upturn of the last decade, it became common to see lenders commanding down payments of 10, 5 or often 0 percent. How does a lender manage the added risk of the low down payment? The solution is Private Mortgage Insurance or PMI. This supplementary policy takes care of the lender if a borrower is unable to pay on the loan and the worth of the house is lower than what the borrower still owes on the loan.
Because the $40-$50 a month per $100,000 borrowed is bundled into the mortgage payment and often isn't even tax deductible, PMI can be costly to a borrower. It's advantageous for the lender because they collect the money, and they get the money if the borrower is unable to pay, contradictory to a piggyback loan where the lender takes in all the costs.
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 expense of PMI?
With the utilization 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 original loan amount. Keen home owners can get off the hook a little earlier. The law states that, upon request of the home owner, the PMI must be released when the principal amount reaches only 80 percent.
It can take countless years to get to the point where the principal is just 20% of the initial amount borrowed, so it's necessary to know how your home has increased in value. After all, any appreciation you've acquired over time counts towards abolishing PMI. So why should you pay it after your loan balance has fallen below the 80% threshold? Despite the fact that nationwide trends predict plummeting home values, understand that real estate is local. Your neighborhood might not be adhering to the national trends and/or your home could have gained equity before things simmered down.
An accredited, licensed real estate appraiser can help home owners understand just when their home's equity goes over the 20% point, as it's a difficult thing to know. As appraisers, it's our job to recognize the market dynamics of our area. At SafeValues Inc., we're experts at determining value trends in Redondo Beach, Los Angeles County and surrounding areas, and we know when property values have risen or declined. When faced with data from an appraiser, the mortgage company will often cancel the PMI with little anxiety. At which time, the homeowner can relish the savings from that point on.
Want to learn more about PMI and the Homeowners Protection Act? Click this link: