Have equity in your home? Want a lower payment? An appraisal from Hub Appraisal can help you get rid of your PMI.It's largely understood that a 20% down payment is common when buying a house. The lender's liability is often only the remainder between the home value and the amount due on the loan, so the 20% supplies a nice cushion against the costs of foreclosure, reselling the home, and natural value fluctuations on the chance that a purchaser defaults.During the recent mortgage upturn of the last decade, it was common to see lenders only asking for down payments of 10, 5 or even 0 percent. A lender is able to endure the additional risk of the minimal down payment with Private Mortgage Insurance or PMI. This supplemental policy guards the lender in the event a borrower defaults on the loan and the value of the house is less than the balance of the loan. PMI can be costly to a borrower on the grounds that the $40-$50 a month per $100,000 borrowed is bundled into the mortgage payment and frequently isn't even tax deductible. It's advantageous for the lender because they obtain the money, and they receive payment if the borrower defaults, in contrast to a piggyback loan where the lender consumes all the costs.
How can a home buyer keep from paying PMI?The Homeowners Protection Act of 1998 requires the lenders on nearly all loans to automatically stop the PMI when the principal balance of the loan reaches 78 percent of the initial loan amount. Keen home owners can get off the hook a little earlier. The law stipulates that, at the request of the homeowner, the PMI must be dropped when the principal amount equals just 80 percent.Because it can take several years to arrive at the point where the principal is only 80% of the initial amount of the loan, it's important to know how your Massachusetts home has appreciated in value. After all, all of the appreciation you've obtained over the years counts towards removing PMI. So why pay it after your loan balance has fallen below the 80% threshold? Even when nationwide trends hint at falling home values, understand that real estate is local. Your neighborhood might not be minding the national trends and/or your home might have secured equity before things simmered down. The hardest thing for almost all consumers to determine is just when their home's equity goes over the 20% point. An accredited, Massachusetts licensed real estate appraiser can surely help. Market dynamics and neighborhood-specific pricing trends are an appraiser's primary job! At Hub Appraisal, we're experts at recognizing value trends in Hubbardston, Worcester County, and surrounding areas, and we know when property values have risen or declined. Faced with data from an appraiser, the mortgage company will often do away with the PMI with little anxiety. At that time, the home owner can retain 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
|
||||||||||||||||||
