Have equity in your home? Want a lower payment? An appraisal from Las Vegas Appraisal Service, Inc. can help you get rid of your PMI.
When getting a mortgage, a 20% down payment is usually the standard. The lender's liability is generally only the difference between the home value and the sum remaining on the loan, so the 20% adds a nice cushion against the costs of foreclosure, reselling the home, and regular value fluctuations on the chance that a purchaser doesn't pay.
During the recent mortgage upturn of the last decade, it was common to see lenders taking down payments of 10, 5 or often 0 percent. A lender is able to handle the increased risk of the low down payment with Private Mortgage Insurance or PMI. PMI takes care of the lender if a borrower doesn't pay on the loan and the market price of the house is less than what is owed on the loan.
PMI is pricey to a borrower in that the $40-$50 a month per $100,000 borrowed is lumped into the mortgage monthly payment and often isn't even tax deductible. Contradictory 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 paid if the borrower is unable to 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 refrain from bearing the expense of PMI?
With the utilization of The Homeowners Protection Act of 1998, on most loans lenders are forced to automatically stop the PMI when the principal balance of the loan equals 78 percent of the beginning loan amount. The law designates that, upon request of the homeowner, the PMI must be dropped when the principal amount equals just 80 percent. So, acute homeowners can get off the hook a little earlier.
It can take many years to get to the point where the principal is only 20% of the initial amount of the loan, so it's necessary to know how your home has appreciated in value. After all, any appreciation you've acquired over time counts towards dismissing PMI. So what's the reason for paying it after your loan balance has dropped below the 80% threshold? Your neighborhood may not be reflecting the national trends and/or your home may have secured equity before things cooled off, so even when nationwide trends predict declining home values, you should understand that real estate is local.
The toughest thing for many home owners to understand is just when their home's equity goes over the 20% point. An accredited, licensed real estate appraiser can definitely help. It is an appraiser's job to recognize the market dynamics of their area. At Las Vegas Appraisal Service, Inc., we know when property values have risen or declined. We're experts at determining value trends in Las Vegas, Clark County and surrounding areas. Faced with information from an appraiser, the mortgage company will usually do away with 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: