Appraisal Express HI, LLC can help you remove your Private Mortgage Insurance
A 20% down payment is usually accepted when buying a house. The lender's risk is oftentimes only the difference between the home value and the sum due on the loan, so the 20% provides a nice cushion against the expenses of foreclosure, selling the home again, and natural value changes in the event a borrower is unable to pay.
The market was accepting down payments as low as 10, 5 and even 0 percent during the mortgage boom of the last decade. How does a lender endure the additional risk of the low down payment? The solution is Private Mortgage Insurance or PMI. PMI guards the lender in case a borrower doesn't pay on the loan and the worth of the property is lower than what is owed on the loan.
PMI is costly to a borrower on the grounds that the $40-$50 a month per $100,000 borrowed is bundled into the mortgage monthly payment and many times isn't even tax deductible. Opposite from a piggyback loan where the lender consumes all the losses, PMI is favorable for the lender because they collect the money, and they receive payment if the borrower doesn't pay.
Does your monthly mortgage payment include PMI? Contact us, you may be able to save money by removing your PMI.
How can a buyer prevent bearing the cost 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 original loan amount. Savvy home owners can get off the hook sooner than expected. The law designates that, at the request of the homeowner, the PMI must be released when the principal amount equals only 80 percent.
It can take countless years to arrive at the point where the principal is only 20% of the initial amount borrowed, so it's necessary to know how your home has increased in value. After all, every bit of appreciation you've acquired over the years counts towards dismissing PMI. So why pay it after the balance of your loan has dropped below the 80% threshold? Even when nationwide trends hint at plunging home values, understand that real estate is local. Your neighborhood may not be heeding the national trends and/or your home may have gained equity before things calmed down.
The toughest thing for most homeowners to know is just when their home's equity goes over the 20% point. A certified, licensed real estate appraiser can surely help. As appraisers, it's our job to know the market dynamics of our area. At Appraisal Express HI, LLC, we're experts at determining value trends in Kihei, Maui County and surrounding areas, and we know when property values have risen or declined. When faced with figures from an appraiser, the mortgage company will usually remove the PMI with little effort. At that time, the home owner can relish the savings from that point on.
Want to learn more about PMI and the Homeowners Protection Act? Click this link: