Have equity in your home? Want a lower payment? An appraisal from Hancock Appraisals can help you get rid of your PMI.A 20% down payment is usually the standard when buying a house. The lender's liability is usually only the remainder between the home value and the sum due on the loan, so the 20% supplies a nice buffer against the costs of foreclosure, selling the home again, and typical value fluctuations on the chance that a borrower defaults.During the recent mortgage upturn that our country recently experienced, it was common to see lenders making deals with down payments of 10, 5, 3 or sometimes 0 percent. A lender is able to endure the increased risk of the minimal down payment with Private Mortgage Insurance or PMI. This supplementary plan takes care of the lender in the event a borrower doesn't pay on the loan and the value of the property is lower than what the borrower still owes on the loan. PMI can be expensive to a borrower on the grounds that the $40-$50 a month per $100,000 borrowed is compiled into the mortgage monthly payment and many times isn't even tax deductible. Different from a piggyback loan where the lender takes in all the damages, PMI is profitable for the lender because they secure the money, and they are covered if the borrower doesn't pay.
How can homeowners refrain from bearing the expense of PMI?With the passage of The Homeowners Protection Act of 1998, lenders are required to automatically cancel the PMI when the principal balance of the loan equals 78 percent of the beginning loan amount on most loans. The law guarantees that, upon request of the homeowner, the PMI must be abandoned when the principal amount equals just 80 percent. So, smart homeowners can get off the hook a little early.Since it can take many years to get to the point where the principal is just 80% of the original amount of the loan, it's essential to know how your Colorado home has grown in value. After all, every bit of appreciation you've obtained over the years counts towards abolishing PMI. So why should you pay it after your loan balance has dropped below the 80% threshold? Even when nationwide trends predict falling home values, understand that real estate is local. Your neighborhood may not be minding the national trends and/or your home could have secured equity before things simmered down. A certified, Colorado licensed real estate appraiser can help homeowners figure out if their equity has reached the 20% point, as it's a hard thing to know. It is an appraiser's job to keep up with the market dynamics of their area. At Hancock Appraisals, we know when property values have risen or declined. We're experts at recognizing value trends in Rocky Ford, Otero County, and surrounding areas. Faced with figures from an appraiser, the mortgage company will usually cancel the PMI with little trouble. At which time, the home owner can retain 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
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