Have equity in your home? Want a lower payment? An appraisal from Elite Appraisal Group can help you get rid of your PMI.It's largely understood that a 20% down payment is common when getting a mortgage. Because the risk for the lender is often only the difference between the home value and the sum remaining on the loan, the 20% provides a nice cushion against the expenses of foreclosure, reselling the home, and typical value variations on the chance that a purchaser is unable to pay.
Lenders were working with down payments discounted to 10, 5 and frequently 0 percent in the peak of last decade's mortgage boom. A lender is able to manage the increased risk of the reduced down payment with Private Mortgage Insurance or PMI. This supplemental plan covers the lender in case a borrower is unable to pay on the loan and the market price of the property is lower than what the borrower still owes on the loan.
Since the $40-$50 a month per $100,000 borrowed is rolled into the mortgage monthly payment and many times isn't even tax deductible, PMI can be pricey to a borrower. As opposed to a piggyback loan where the lender consumes all the losses, PMI is advantageous for the lender because they collect the money, and they get the money if the borrower defaults.
How can homebuyers prevent bearing the expense of PMI?The Homeowners Protection Act of 1998 makes the lenders on nearly all loans to automatically terminate the PMI when the principal balance of the loan equals 78 percent of the beginning loan amount. Smart home owners can get off the hook sooner than expected. The law states that, at the request of the home owner, the PMI must be released when the principal amount equals just 80 percent.
Because it can take a significant number of years to arrive at the point where the principal is just 80% of the original amount borrowed, it's essential to know how your Kentucky home has increased in value. After all, every bit of appreciation you've accomplished over the years counts towards removing PMI. So what's the reason for paying it after your loan balance has fallen below the 80% mark? Even when nationwide trends hint at declining home values, realize that real estate is local. Your neighborhood may not be adopting the national trends and/or your home might have gained equity before things cooled off.
An accredited, Kentucky licensed real estate appraiser can help homeowners figure out if their equity has reached the 20% point, as it's a difficult thing to know. As appraisers, it's our job to keep up with the market dynamics of our area. At Elite Appraisal Group, we know when property values have risen or declined. We're experts at identifying value trends in Mayfield, Graves County, and surrounding areas. When faced with figures from an appraiser, the mortgage company will often cancel the PMI with little anxiety. At which time, the homeowner can delight in the savings from that point on.
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