South Shore Realty Advisors, Inc can help you remove your Private Mortgage Insurance
A 20% down payment is typically the standard when purchasing a home. The lender's liability is generally only the remainder between the home value and the amount due on the loan, so the 20% supplies a nice buffer against the charges of foreclosure, reselling the home, and natural value fluctuations on the chance that a borrower doesn't pay.
Banks were accepting down payments down to 10, 5 and even 0 percent during the mortgage boom of the last decade. How does a lender handle the increased risk of the small down payment? The answer is Private Mortgage Insurance or PMI. PMI guards the lender in the event a borrower defaults on the loan and the worth of the home is lower than the balance of the loan.
Since the $40-$50 a month per $100,000 borrowed is compiled into the mortgage payment and many times isn't even tax deductible, PMI can be pricey to a borrower. It's advantageous for the lender because they obtain the money, and they get the money if the borrower is unable to pay, opposite from a piggyback loan where the lender consumes all the costs.
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?
With the employment of The Homeowners Protection Act of 1998, on nearly all loans lenders are required to automatically stop the PMI when the principal balance of the loan reaches 78 percent of the beginning loan amount. Wise home owners can get off the hook a little earlier. The law pledges that, at the request of the home owner, the PMI must be released when the principal amount reaches only 80 percent.
It can take countless years to get to the point where the principal is just 20% of the original amount of the loan, so it's important to know how your home has grown in value. After all, every bit of appreciation you've obtained over the years counts towards removing PMI. So what's the reason for paying it after the balance of your loan has dropped below the 80% mark? Your neighborhood might not be adopting the national trends and/or your home could have secured equity before things calmed down, so even when nationwide trends predict declining 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 difficult thing to know. As appraisers, it's our job to know the market dynamics of our area. At South Shore Realty Advisors, Inc, we know when property values have risen or declined. We're experts at recognizing value trends in Marshfield, Plymouth County and surrounding areas. Faced with information from an appraiser, the mortgage company will usually remove the PMI with little anxiety. At that time, the homeowner can retain the savings from that point on.
Want to learn more about PMI and the Homeowners Protection Act? Click this link: