Have equity in your home? Want a lower payment? An appraisal from Grantham Appraisal & Realty, Inc. can help you get rid of your PMI.When buying a house, a 20% down payment is usually the standard. Because the risk for the lender is oftentimes only the remainder between the home value and the amount outstanding on the loan, the 20% supplies a nice buffer against the costs of foreclosure, reselling the home, and regular value variations on the chance that a purchaser doesn't pay.
During the recent mortgage boom that our country recently experienced, it was widespread to see lenders reducing down payments to 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 guards the lender in the event a borrower defaults on the loan and the market price of the property is less than the loan balance.
PMI is pricey to a borrower on the grounds that the $40-$50 a month per $100,000 borrowed is rolled into the mortgage monthly payment and on many occasions isn't even tax deductible. It's money-making for the lender because they collect the money, and they receive payment if the borrower doesn't pay, in contrast to a piggyback loan where the lender absorbs all the deficits.
How buyers can prevent paying PMIThe Homeowners Protection Act of 1998 forces the lenders on nearly all loans to automatically eliminate the PMI when the principal balance of the loan equals 78 percent of the original loan amount. Acute home owners can get off the hook ahead of time. The law guarantees that, at the request of the home owner, the PMI must be abandoned when the principal amount reaches just 80 percent.
It can take many years to arrive at the point where the principal is only 80% of the original amount borrowed, so it's important to know how your Georgia home has appreciated in value. After all, all of the appreciation you've obtained over the years counts towards removing PMI. So why should you pay it after your loan balance has dropped below the 80% mark? Even when nationwide trends hint at falling home values, understand that real estate is local. Your neighborhood may not be adhering to the national trends and/or your home could have secured equity before things simmered down.
The hardest thing for most people to determine is whether their home equity has exceeded the 20% point. An accredited, Georgia licensed real estate appraiser can surely help. It's an appraiser's job to recognize the market dynamics of their area. At Grantham Appraisal & Realty, Inc., we know when property values have risen or declined. We're masters at pinpointing value trends in Fortson, Muscogee County, and surrounding areas. Faced with information from an appraiser, the mortgage company will often drop the PMI with little trouble. At that time, the homeowner can delight in the savings from that point on.
Want to learn more about PMI and the Homeowners Protection Act? Click this link:
Cancellation of Private Mortgage Insurance: Federal Law May Save You Hundreds of Dollars Each Year