Have equity in your home? Want a lower payment? An appraisal from Whitson Homes And Land can help you get rid of your PMI.A 20% down payment is typically the standard when getting a mortgage. Because the liability for the lender is often only the remainder between the home value and the sum outstanding on the loan, the 20% supplies a nice buffer against the expenses of foreclosure, reselling the home, and regular value variations on the chance that a borrower doesn't pay.During the recent mortgage boom that our country recently experienced, it was widespread to see lenders making deals with down payments of 10, 5 or sometimes 0 percent. A lender is able to endure the added risk of the minimal down payment with Private Mortgage Insurance or PMI. PMI covers the lender if a borrower is unable to pay on the loan and the market price of the home is lower than the loan balance. Since 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 expensive to a borrower. It's money-making for the lender because they secure the money, and they are covered if the borrower defaults, different from a piggyback loan where the lender consumes all the losses.
How can a home buyer keep from bearing the cost of PMI?With the passage of The Homeowners Protection Act of 1998, lenders are required to automatically terminate the PMI when the principal balance of the loan equals 78 percent of the primary loan amount on most loans. The law designates that, upon request of the home owner, the PMI must be dropped when the principal amount equals just 80 percent. So, smart home owners can get off the hook sooner than expected.Because it can take many years to arrive at the point where the principal is only 80% of the initial amount of the loan, it's crucial to know how your North Carolina home has grown in value. After all, all of the appreciation you've acquired over time counts towards dismissing PMI. So why pay it after the balance of your loan has fallen below the 80% mark? Your neighborhood may not follow national trends and/or your home might have secured equity before the economy simmered down. So even when nationwide trends signify a reduction in home values, you should realize that real estate is local. An accredited, North Carolina licensed real estate appraiser can help home owners figure out just when their home's equity rises above the 20% point, as it's a tough thing to know. It is an appraiser's job to recognize the market dynamics of their area. At Whitson Homes And Land, we know when property values have risen or declined. We're experts at determining value trends in Marion, McDowell County, and surrounding areas. When faced with data from an appraiser, the mortgage company will generally do away with the PMI with little trouble. At that 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: Cancellation of Private Mortgage Insurance: Federal Law May Save You Hundreds of Dollars Each Year
|
||||||||||||||||||
