Let Columbus Appraisal Company, LLC help you determine if you can cancel your PMIIt's generally inferred that a 20% down payment is common when getting a mortgage. The lender's risk is usually only the remainder between the home value and the amount outstanding on the loan, so the 20% provides a nice cushion against the costs of foreclosure, selling the home again, and typical value fluctuations on the chance that a purchaser doesn't pay. The market was working with down payments down to 10, 5 and even 0 percent in the peak of last decade's mortgage boom. How does a lender endure the added risk of the small down payment? The solution is Private Mortgage Insurance or PMI. PMI guards the lender in the event a borrower is unable to pay on the loan and the market price of the property is lower than what is owed on the loan. PMI can be expensive to a borrower in that the $40-$50 a month per $100,000 borrowed is lumped into the mortgage monthly payment and often isn't even tax deductible. Unlike a piggyback loan where the lender consumes all the damages, PMI is money-making for the lender because they obtain the money, and they get the money if the borrower is unable to pay. 
Does your monthly mortgage payment include PMI? Contact us, you may be able to save money by removing your PMI. How can home owners avoid bearing the expense of PMI?The Homeowners Protection Act of 1998 obligates the lenders on nearly all loans to automatically cancel the PMI when the principal balance of the loan equals 78 percent of the initial loan amount. The law designates that, upon request of the home owner, the PMI must be abandoned when the principal amount reaches only 80 percent. So, acute homeowners can get off the hook a little early. Because it can take countless years to reach the point where the principal is only 20% of the initial amount borrowed, it's essential to know how your home has grown in value. After all, any appreciation you've achieved over the years counts towards removing PMI. So why should you pay it after your loan balance has fallen below the 80% mark? Your neighborhood may not be adopting the national trends and/or your home might have acquired equity before things simmered down, so even when nationwide trends forecast decreasing home values, you should understand that real estate is local. An accredited, licensed real estate appraiser can help home owners understand just when their home's equity goes over the 20% point, as it's a hard thing to know. It is an appraiser's job to know the market dynamics of their area. At Columbus Appraisal Company, LLC, we're masters at recognizing value trends in Columbus, Franklin 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 often eliminate the PMI with little anxiety. 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: |