Have equity in your home? Want a lower payment? An appraisal from Ruffino Appraisal Group, LLC. can help you get rid of your PMI.
It's largely known that a 20% down payment is common when purchasing a home. Considering the liability for the lender is often only the remainder between the home value and the sum outstanding on the loan, the 20% provides a nice buffer against the costs of foreclosure, selling the home again, and typical value changesin the event a borrower is unable to pay.
During the recent mortgage boom of the last decade, it was customary to see lenders commanding down payments of 10, 5 or even 0 percent. A lender is able to endure the additional risk of the reduced down payment with Private Mortgage Insurance or PMI. This supplemental plan protects the lender if a borrower doesn't pay on the loan and the worth of the property is less than the loan balance.
PMI can be pricey to a borrower in that the $40-$50 a month per $100,000 borrowed is compiled into the mortgage monthly payment and oftentimes isn't even tax deductible. It's beneficial for the lender because they obtain the money, and they get the money if the borrower defaults, unlike 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 buyer keep from bearing the expense of PMI?
With the employment of The Homeowners Protection Act of 1998, on most loans lenders are required to automatically cancel the PMI when the principal balance of the loan reaches 78 percent of the initial loan amount. The law states that, upon request of the homeowner, the PMI must be released when the principal amount reaches only 80 percent. So, keen homeowners can get off the hook sooner than expected.
It can take countless years to get to the point where the principal is just 20% of the initial amount borrowed, so it's important to know how your home has appreciated in value. After all, every bit of appreciation you've acquired over time counts towards removing PMI. So why pay it after the balance of your loan has dropped below the 80% mark? Even when nationwide trends hint at plunging home values, realize that real estate is local. Your neighborhood might not be adopting the national trends and/or your home could have gained equity before things simmered down.
The toughest thing for most homeowners to understand is just when their home's equity rises above the 20% point. A certified, licensed real estate appraiser can definitely help. It's an appraiser's job to know the market dynamics of their area. At Ruffino Appraisal Group, LLC., we know when property values have risen or declined. We're masters at identifying value trends in Margate, Broward County and surrounding areas. When faced with figures from an appraiser, the mortgage company will usually 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: