Have equity in your home? Want a lower payment? An appraisal from South Shore Realty Advisors, Inc can help you get rid of your PMI.When purchasing a home, a 20% down payment is usually the standard. The lender's liability is often only the difference between the home value and the amount outstanding on the loan, so the 20% supplies a nice buffer against the expenses of foreclosure, reselling the home, and typical value fluctuations on the chance that a purchaser is unable to pay. During the recent mortgage boom of the last decade, it became widespread to see lenders taking down payments of 10, 5 or even 0 percent. A lender is able to endure the additional risk of the reduced down payment with Private Mortgage Insurance or PMI. PMI guards the lender if a borrower defaults on the loan and the market price of the home is less than the loan balance. Because the $40-$50 a month per $100,000 borrowed is compiled into the mortgage monthly payment and generally isn't even tax deductible, PMI can be expensive to a borrower. It's lucrative for the lender because they acquire the money, and they receive payment if the borrower is unable to pay, contradictory to a piggyback loan where the lender takes in 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 a homeowner refrain from paying PMI?The Homeowners Protection Act of 1998 makes the lenders on most loans to automatically cancel the PMI when the principal balance of the loan reaches 78 percent of the beginning loan amount. The law pledges that, at the request of the home owner, the PMI must be released when the principal amount reaches only 80 percent. So, savvy homeowners can get off the hook a little early. Because it can take many years to reach the point where the principal is only 20% of the original loan amount, it's necessary to know how your home has appreciated in value. After all, all of the appreciation you've gained over time counts towards dismissing PMI. So what's the reason for paying it after your loan balance has dropped below the 80% threshold? Despite the fact that nationwide trends indicate falling home values, realize that real estate is local. Your neighborhood might not be reflecting the national trends and/or your home might have gained equity before things settled down. A certified, licensed real estate appraiser can help home owners understand just when their home's equity goes over the 20% point, as it's a difficult thing to know. As appraisers, it's our job to understand the market dynamics of our area. At South Shore Realty Advisors, Inc, we're experts at recognizing value trends in Marshfield, Plymouth County and surrounding areas, and we know when property values have risen or declined. Faced with data from an appraiser, the mortgage company will often do away with the PMI with little trouble. At that time, the homeowner can delight in the savings from that point on.
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