Ruffino Appraisal Group, LLC. can help you remove your Private Mortgage Insurance
It's largely inferred that a 20% down payment is the standard when purchasing a home. The lender's liability is often only the difference between the home value and the sum due on the loan, so the 20% adds a nice cushion against the expenses of foreclosure, reselling the home, and natural value variations in the event a purchaser is unable to pay.
During the recent mortgage upturn of the mid 2000s, it became widespread to see lenders requiring down payments of 10, 5 or often 0 percent. A lender is able to endure the added risk of the reduced down payment with Private Mortgage Insurance or PMI. This additional plan guards the lender if a borrower defaults on the loan and the value of the property is less than the balance of the loan.
Because the $40-$50 a month per $100,000 borrowed is rolled into the mortgage payment and oftentimes isn't even tax deductible, PMI can be costly to a borrower. It's beneficial for the lender because they obtain the money, and they get the money if the borrower defaults, opposite from a piggyback loan where the lender consumes all the damages.
Does your monthly mortgage payment include PMI? Contact us, you may be able to save money by removing your PMI.
How can homebuyers keep from bearing the cost of PMI?
With the utilization of The Homeowners Protection Act of 1998, on most loans lenders are required to automatically cease the PMI when the principal balance of the loan equals 78 percent of the beginning loan amount. The law states that, at the request of the home owner, the PMI must be dropped when the principal amount equals only 80 percent. So, wise home owners can get off the hook ahead of time.
It can take countless years to reach the point where the principal is only 20% of the initial amount borrowed, so it's essential to know how your home has appreciated in value. After all, any appreciation you've gained over time counts towards removing PMI. So why pay it after the balance of your loan has dropped below the 80% threshold? Even when nationwide trends forecast plunging home values, understand that real estate is local. Your neighborhood may not be adopting the national trends and/or your home might have acquired equity before things calmed down.
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. It's an appraiser's job to keep up with the market dynamics of their area. At Ruffino Appraisal Group, LLC., we're experts at determining value trends in Margate, Broward 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 generally eliminate the PMI with little effort. At that time, the home owner can enjoy the savings from that point on.
Want to learn more about PMI and the Homeowners Protection Act? Click this link: