Let Appraisals Plus help you discover if you can eliminate your PMIIt's widely understood that a 20% down payment is accepted when buying a house. Considering the risk for the lender is generally only the remainder between the home value and the sum outstanding on the loan, the 20% adds a nice cushion against the expenses of foreclosure, reselling the home, and regular value variationson the chance that a purchaser defaults. Banks were working with down payments down to 10, 5 and even 0 percent during the mortgage boom of the last decade. A lender is able to endure the added risk of the small down payment with Private Mortgage Insurance or PMI. PMI guards the lender in case a borrower defaults on the loan and the value of the property is lower than what the borrower still owes on the loan. PMI can be expensive to a borrower in that the $40-$50 a month per $100,000 borrowed is compiled into the mortgage monthly payment and frequently isn't even tax deductible. It's favorable for the lender because they secure the money, and they receive payment if the borrower is unable to pay, different from a piggyback loan where the lender takes in all the deficits. 
Does your monthly mortgage payment include PMI? Contact us, you may be able to save money by removing your PMI. How homeowners can avoid bearing the expense of PMIThe Homeowners Protection Act of 1998 requires the lenders on most loans to automatically eliminate the PMI when the principal balance of the loan equals 78 percent of the beginning loan amount. Wise homeowners can get off the hook beforehand. The law designates that, at the request of the homeowner, the PMI must be abandoned when the principal amount reaches only 80 percent. It can take many years to reach the point where the principal is just 20% of the initial loan amount, so it's important to know how your home has grown in value. After all, all of the appreciation you've acquired over the years counts towards dismissing PMI. So why should you pay it after the balance of your loan has fallen below the 80% mark? Your neighborhood may not be reflecting the national trends and/or your home could have secured equity before things calmed down, so even when nationwide trends predict falling home values, you should realize that real estate is local. An accredited, licensed real estate appraiser can help homeowners 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 Appraisals Plus, we're masters at determining value trends in Philadelphia, Philadelphia County and surrounding areas, and we know when property values have risen or declined. Faced with information from an appraiser, the mortgage company will often eliminate the PMI with little trouble. At which time, the homeowner can relish the savings from that point on.
Want to learn more about PMI and the Homeowners Protection Act? Click this link: |