Dante Negroni Appraisals, Inc. can help you remove your Private Mortgage InsuranceWhen buying a house, a 20% down payment is usually the standard. Because the liability for the lender is usually only the difference between the home value and the sum due on the loan, the 20% adds a nice buffer against the costs of foreclosure, reselling the home, and natural value variations in the event a borrower defaults.During the recent mortgage upturn of the last decade, it became customary to see lenders reducing down payments to 10, 5, 3 or often 0 percent. A lender is able to endure the increased risk of the small down payment with Private Mortgage Insurance or PMI. PMI guards the lender if a borrower doesn't pay on the loan and the value of the house is less than the loan balance. Since the $40-$50 a month per $100,000 borrowed is bundled into the mortgage monthly payment and frequently isn't even tax deductible, PMI is pricey to a borrower. It's favorable for the lender because they obtain the money, and they get the money if the borrower doesn't pay, different from a piggyback loan where the lender consumes all the damages.
How homebuyers can keep from bearing the expense of PMIThe Homeowners Protection Act of 1998 requires the lenders on the majority of loans to automatically cease the PMI when the principal balance of the loan equals 78 percent of the primary loan amount. Keen homeowners can get off the hook sooner than expected. The law designates that, upon request of the homeowner, the PMI must be abandoned when the principal amount equals only 80 percent.Because it can take several years to reach the point where the principal is only 80% of the initial amount of the loan, it's necessary to know how your Pennsylvania home has increased in value. After all, every bit of appreciation you've gained over the years counts towards abolishing PMI. So what's the reason for paying it after the balance of your loan has fallen below the 80% threshold? Your neighborhood may not adhere to national trends and/or your home may have secured equity before things declined. So even when nationwide trends predict a reduction in home values, you should understand that real estate is local. The hardest thing for most homeowners to determine is just when their home's equity rises above the 20% point. A certified, Pennsylvania licensed real estate appraiser can surely help. It's an appraiser's job to recognize the market dynamics of their area. At Dante Negroni Appraisals, Inc., we're experts at analyzing value trends in Philadelphia, Philadelphia County, and surrounding areas, and we know when property values have risen or declined. Faced with data from an appraiser, the mortgage company will most often do away with the PMI with little anxiety. At that time, the homeowner can enjoy the savings from that point on.
Want to learn more about PMI and the Homeowners Protection Act? Click this link: Cancellation of Private Mortgage Insurance: Federal Law May Save You Hundreds of Dollars Each Year
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Paying PMI?
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