Personal Service Realty's Residential Valuation Group can help you remove your Private Mortgage Insurance
A 20% down payment is typically accepted when getting a mortgage. The lender's risk is oftentimes only the difference between the home value and the amount outstanding on the loan, so the 20% provides a nice cushion against the charges of foreclosure, selling the home again, and natural value fluctuations on the chance that a borrower doesn't pay.
The market was accepting down payments down to 10, 5 and often 0 percent during the mortgage boom of the last decade. A lender is able to endure the additional risk of the minimal down payment with Private Mortgage Insurance or PMI. PMI covers the lender in the event a borrower defaults on the loan and the market price of the home is less than the balance of the loan.
Because the $40-$50 a month per $100,000 borrowed is lumped into the mortgage payment and generally isn't even tax deductible, PMI can be costly to a borrower. It's beneficial for the lender because they acquire the money, and they get the money if the borrower defaults, 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 can home buyers avoid bearing the expense of PMI?
With the employment of The Homeowners Protection Act of 1998, on most loans lenders are required to automatically terminate the PMI when the principal balance of the loan equals 78 percent of the initial loan amount. The law pledges that, upon request of the home owner, the PMI must be abandoned when the principal amount reaches just 80 percent. So, acute home owners can get off the hook a little early.
It can take countless years to reach the point where the principal is only 20% of the original amount of the loan, so it's essential to know how your home has grown in value. After all, any appreciation you've gained over time counts towards abolishing PMI. So what's the reason for paying it after your loan balance has fallen below the 80% threshold? Even when nationwide trends indicate plunging home values, realize that real estate is local. Your neighborhood may not be heeding the national trends and/or your home might have secured equity before things simmered down.
The difficult thing for most homeowners to understand is just when their home's equity goes over the 20% point. An accredited, licensed real estate appraiser can surely help. As appraisers, it's our job to know the market dynamics of our area. At Personal Service Realty's Residential Valuation Group, we know when property values have risen or declined. We're experts at determining value trends in Jacksonville, Duval County and surrounding areas. When faced with information from an appraiser, the mortgage company will often drop the PMI with little effort. At which 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:
Would you like to save money by not having to pay for Private Mortgage Insurance? We can help. Simply fill out the form below as completely as possible and we'll send you information on how to save PMI expenses, with no obligation to you. We guarantee your privacy.