Let D. Robbins & Associates, Inc. help you learn if you can get rid of your PMIWhen buying a house, a 20% down payment is typically the standard. Because the risk for the lender is often only the difference between the home value and the amount due on the loan, the 20% provides a nice cushion against the charges of foreclosure, selling the home again, and natural value variationsin the event a purchaser is unable to pay. Lenders were accepting down payments down to 10, 5 and often 0 percent during the mortgage boom of the mid 2000s. How does a lender endure the added risk of the low down payment? The answer is Private Mortgage Insurance or PMI. This supplemental plan guards the lender in the event a borrower doesn't pay on the loan and the worth of the property is less than the balance of the loan. PMI can be costly to a borrower because the $40-$50 a month per $100,000 borrowed is compiled into the mortgage monthly payment and generally isn't even tax deductible. Opposite from a piggyback loan where the lender consumes all the deficits, PMI is beneficial for the lender because they obtain the money, and they get the money 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 home owner avoid bearing the cost of PMI?The Homeowners Protection Act of 1998 requires the lenders on nearly all loans to automatically stop the PMI when the principal balance of the loan equals 78 percent of the initial loan amount. Savvy homeowners can get off the hook ahead of time. The law pledges that, upon request of the home owner, the PMI must be dropped when the principal amount reaches just 80 percent. It can take countless years to arrive at the point where the principal is only 20% of the initial loan amount, so it's necessary to know how your home has appreciated in value. After all, every bit of appreciation you've achieved over time counts towards removing PMI. So why pay it after the balance of your loan has dropped below the 80% threshold? Your neighborhood might not be adhering to the national trends and/or your home might have gained equity before things cooled off, so even when nationwide trends signify declining home values, you should understand that real estate is local. The toughest thing for most home owners to understand is just when their home's equity goes over the 20% point. A certified, licensed real estate appraiser can surely help. As appraisers, it's our job to keep up with the market dynamics of our area. At D. Robbins & Associates, Inc., we're masters at determining value trends in Meridian, Ada County and surrounding areas, and we know when property values have risen or declined. Faced with data from an appraiser, the mortgage company will usually remove the PMI with little anxiety. At which 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: |