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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.It's typically inferred that a 20% down payment is the standard when purchasing a home. Since the liability for the lender is oftentimes only the difference between the home value and the amount outstanding on the loan, the 20% provides a nice buffer against the costs of foreclosure, selling the home again, and natural value changes on the chance that a purchaser is unable to pay.
During the recent mortgage upturn that our country recently experienced, it became widespread to see lenders only asking for down payments of 10, 5 or even 0 percent. A lender is able to manage the additional risk of the minimal down payment with Private Mortgage Insurance or PMI. PMI protects the lender in the event a borrower doesn't pay on the loan and the market price of the property is less than what is owed on the loan.
PMI can be expensive to a borrower on the grounds that the $40-$50 a month per $100,000 borrowed is lumped into the mortgage monthly payment and often isn't even tax deductible. It's profitable for the lender because they secure the money, and they are covered if the borrower is unable to pay, separate from a piggyback loan where the lender absorbs all the costs.
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The money you keep from cancelling the PMI required when you got your mortgage pays for the appraisal in a matter of months. Nobody is more qualified than Appraisal-One when it comes to appreciating values in the city of Huntington Beach and Orange County. Contact us today. |
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How homeowners can refrain from bearing the cost of PMI The Homeowners Protection Act of 1998 requires the lenders on nearly all loans to automatically cease the PMI when the principal balance of the loan reaches 78 percent of the initial loan amount. The law promises that, at the request of the home owner, the PMI must be dropped when the principal amount reaches only 80 percent. So, keen home owners can get off the hook a little earlier.
It can take several years to arrive at the point where the principal is only 80% of the initial loan amount, so it's necessary to know how your California home has increased in value. After all, every bit of appreciation you've gained over time counts towards removing PMI. So why pay it after your loan balance has dropped below the 80% threshold? Your neighborhood may not follow national trends and/or your home may have acquired equity before things simmered down. So even when nationwide trends forecast falling home values, you should know most importantly that real estate is local.
The difficult thing for most homeowners to figure out is just when their home's equity rises above the 20% point. An accredited, 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 masters at determining value trends in Huntington Beach, Orange County, and surrounding areas. Faced with data from an appraiser, the mortgage company will generally cancel the PMI with little anxiety. At which time, the homeowner can delight in the savings from that point on.
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Does your monthly mortgage payment include a fee for PMI? Call Appraisal-One today at 1-714-846-8726 or send us an e-mail. A new appraisal could save you thousands. |
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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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