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Have equity in your home? Want a lower payment? An appraisal from Appraisal-One can help you get rid of your PMI.
A 20% down payment is usually accepted when purchasing a home.
Since the risk for the lender is often only the difference between the home value and the sum remaining on the loan, the 20% adds a nice cushion against the charges of foreclosure, reselling the home, and natural value fluctuations on the chance that a purchaser defaults.
During the recent mortgage upturn of the last decade, it became customary to see lenders making deals with down payments of 10, 5, 3 or often 0 percent.
How does a lender manage the increased risk of the small down payment? The solution is Private Mortgage Insurance or PMI.
PMI covers the lender in case a borrower defaults on the loan and the value of the home is lower than what the borrower still owes on the loan.
PMI is pricey to a borrower on the grounds that the $40-$50 a month per $100,000 borrowed is lumped into the mortgage monthly payment and many times isn't even tax deductible.
It's lucrative for the lender because they secure the money, and they are covered if the borrower defaults, unlike a piggyback loan where the lender takes in all the damages.
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Did you have less than 20% to put down on your mortgage? Contact Appraisal-One today at 1-714-846-8726. You may be able to cancel your Private Mortgage Insurance premium.
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How can homeowners refrain from bearing the cost of PMI?
The Homeowners Protection Act of 1998 makes the lenders on the majority of loans to automatically cease the PMI when the principal balance of the loan reaches 78 percent of the beginning loan amount.
Acute home owners can get off the hook beforehand. The law guarantees that, upon request of the homeowner, the PMI must be released when the principal amount reaches just 80 percent.
Considering it can take many years to arrive at the point where the principal is only 80% of the original loan amount, it's important to know how your California home has increased in value.
After all, every bit of appreciation you've gained over the years counts towards abolishing PMI. So why should you pay it after the balance of your loan has fallen below the 80% mark?
Your neighborhood may not conform to national trends and/or your home might have secured equity before things simmered down. So even when nationwide trends hint at a reduction in home values, you should know most importantly that real estate is local.
The toughest thing for many people to figure out is just when their home's equity rises above the 20% point. A certified, California licensed real estate appraiser can definitely help.
Market dynamics and neighborhood-specific pricing trends are an appraiser's primary job!
At Appraisal-One, we know when property values have risen or declined. We're experts at recognizing value trends in Huntington Beach, Orange County, and surrounding areas.
When faced with data from an appraiser, the mortgage company will generally eliminate the PMI with little trouble. At which time, the home owner can enjoy the savings from that point on.
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Did you have less than 20% to put down on your mortgage? Call Appraisal-One today at 1-714-846-8726 to see if you can save money by removing your Private Mortgage Insurance premium.
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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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