Let Medina Appraisal Company help you figure out if you can get rid of your PMIIt's largely understood that a 20% down payment is accepted when getting a mortgage. Because the risk for the lender is often only the difference between the home value and the sum outstanding on the loan, the 20% supplies a nice buffer against the costs of foreclosure, selling the home again, and natural value variationsin the event a borrower doesn't pay. Lenders were taking down payments as low as 10, 5 and even 0 percent during the mortgage boom of the mid 2000s. How does a lender manage the additional risk of the small down payment? The solution is Private Mortgage Insurance or PMI. This supplementary policy takes care of the lender in the event a borrower is unable to pay on the loan and the worth of the house is less than the loan balance. Because the $40-$50 a month per $100,000 borrowed is lumped into the mortgage monthly payment and many times isn't even tax deductible, PMI can be pricey to a borrower. Opposite from a piggyback loan where the lender takes in all the losses, PMI is profitable for the lender because they secure the money, and they get paid if the borrower defaults. 
Does your monthly mortgage payment include PMI? Contact us, you may be able to save money by removing your PMI. How homeowners can avoid bearing the expense of PMIWith the implementation of The Homeowners Protection Act of 1998, on most loans lenders are required to automatically cease the PMI when the principal balance of the loan reaches 78 percent of the original loan amount. The law stipulates that, upon request of the home owner, the PMI must be dropped when the principal amount reaches only 80 percent. So, smart homeowners can get off the hook sooner than expected. It can take many years to reach the point where the principal is only 20% of the original amount of the loan, so it's important to know how your home has increased in value. After all, all of the appreciation you've achieved over the years counts towards abolishing PMI. So why pay it after your loan balance has dropped below the 80% mark? Your neighborhood might not be reflecting the national trends and/or your home might have gained equity before things calmed down, so even when nationwide trends hint at plunging home values, you should realize that real estate is local. 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 tough thing to know. As appraisers, it's our job to recognize the market dynamics of our area. At Medina Appraisal Company, we're experts at pinpointing value trends in Brunswick, OH, Medina County and surrounding areas, and we know when property values have risen or declined. Faced with figures from an appraiser, the mortgage company will generally eliminate the PMI with little effort. At which time, the home owner can retain the savings from that point on.
Want to learn more about PMI and the Homeowners Protection Act? Click this link: |