Have equity in your home? Want a lower payment? An appraisal from American Appraisal, Inc. 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 remainder between the home value and the sum remaining on the loan, so the 20% provides a nice cushion against the charges of foreclosure, reselling the home, and typical value changes in the event a purchaser defaults. During the recent mortgage upturn of the last decade, it was widespread to see lenders requiring down payments of 10, 5 or even 0 percent. A lender is able to manage the additional risk of the low down payment with Private Mortgage Insurance or PMI. This additional plan protects the lender in case a borrower is unable to pay on the loan and the worth of the property is lower than the loan balance. PMI is costly to a borrower in that the $40-$50 a month per $100,000 borrowed is lumped into the mortgage payment and generally isn't even tax deductible. Opposite from a piggyback loan where the lender takes in all the losses, PMI is favorable for the lender because they collect 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 home owners can refrain from bearing the expense of PMIThe Homeowners Protection Act of 1998 obligates the lenders on nearly all loans to automatically stop the PMI when the principal balance of the loan reaches 78 percent of the beginning loan amount. Smart homeowners can get off the hook a little early. The law designates that, at the request of the home owner, the PMI must be abandoned when the principal amount reaches only 80 percent. It can take countless years to get to the point where the principal is only 20% of the initial amount of the loan, so it's important to know how your home has appreciated in value. After all, any appreciation you've obtained over time counts towards abolishing PMI. So why should you pay it after your loan balance has fallen below the 80% mark? Your neighborhood might not be adopting the national trends and/or your home might have gained equity before things cooled off, so even when nationwide trends forecast plunging home values, you should realize that real estate is local. An accredited, licensed real estate appraiser can help home owners understand just when their home's equity rises above the 20% point, as it's a hard thing to know. As appraisers, it's our job to keep up with the market dynamics of our area. At American Appraisal, Inc., we're masters at determining value trends in Bakersfield, Kern 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 often drop the PMI with little effort. At that time, the homeowner can delight in the savings from that point on.
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