Have equity in your home? Want a lower payment? An appraisal from Houston Appraisals LLC can help you get rid of your PMI.A 20% down payment is typically accepted when getting a mortgage. Considering the risk for the lender is usually only the remainder between the home value and the amount remaining on the loan, the 20% provides a nice buffer against the costs of foreclosure, reselling the home, and typical value fluctuations in the event a borrower doesn't pay.
During the recent mortgage boom of the last decade, it was customary to see lenders reducing down payments to 10, 5 or even 0 percent. How does a lender endure the increased risk of the small down payment? The answer is Private Mortgage Insurance or PMI. This additional plan guards the lender if a borrower is unable to pay on the loan and the value of the house is less than the loan balance.
PMI is costly to a borrower on the grounds that the $40-$50 a month per $100,000 borrowed is compiled into the mortgage payment and often isn't even tax deductible. As opposed to a piggyback loan where the lender takes in all the damages, PMI is lucrative for the lender because they collect the money, and they get the money if the borrower doesn't pay.
How can a home owner keep from paying PMI?The Homeowners Protection Act of 1998 makes the lenders on the majority of loans to automatically eliminate the PMI when the principal balance of the loan reaches 78 percent of the beginning loan amount. The law pledges that, upon request of the homeowner, the PMI must be released when the principal amount equals only 80 percent. So, acute home owners can get off the hook a little earlier.
Because it can take many years to arrive at the point where the principal is just 80% of the original loan amount, it's essential to know how your Ohio home has increased in value. After all, any appreciation you've accomplished over the years counts towards dismissing PMI. So why pay it after the balance of your loan has dropped below the 80% mark? Your neighborhood might not follow national trends and/or your home could have gained equity before things simmered down. So even when nationwide trends hint at falling home values, you should understand that real estate is local.
A certified, Ohio licensed real estate appraiser can help homeowners figure out if their equity has exceeed 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 Houston Appraisals LLC, we know when property values have risen or declined. We're experts at determining value trends in Youngstown, Mahoning County, and surrounding areas. When faced with data from an appraiser, the mortgage company will generally cancel the PMI with little anxiety. At which time, the home owner can delight in the savings from that point on.
Want to learn more about PMI and the Homeowners Protection Act? Click this link: