Nordquist Appraisal LLC can help you remove your Private Mortgage Insurance
When purchasing a home, a 20% down payment is typically the standard. Since the liability for the lender is usually only the difference between the home value and the amount remaining 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 doesn't pay.
The market was working with down payments down to 10, 5 and often 0 percent during the mortgage boom of the mid 2000s. A lender is able to handle the added risk of the reduced down payment with Private Mortgage Insurance or PMI. This added plan takes care of the lender if a borrower doesn't pay on the loan and the market price of the property is lower than what the borrower still owes on the loan.
Since the $40-$50 a month per $100,000 borrowed is compiled into the mortgage monthly payment and often isn't even tax deductible, PMI is costly to a borrower. It's profitable for the lender because they secure the money, and they receive payment if the borrower is unable to pay, unlike a piggyback loan where the lender takes in all the costs.
Does your monthly mortgage payment include PMI? Contact us, you may be able to save money by removing your PMI.
How can home buyers keep from bearing the expense of PMI?
The Homeowners Protection Act of 1998 obligates the lenders on nearly all loans to automatically terminate the PMI when the principal balance of the loan equals 78 percent of the beginning loan amount. The law designates that, upon request of the home owner, the PMI must be abandoned when the principal amount equals just 80 percent. So, smart homeowners can get off the hook sooner than expected.
Because it can take many years to get to the point where the principal is just 20% of the original amount borrowed, it's crucial to know how your home has increased in value. After all, all of the appreciation you've obtained over time counts towards abolishing PMI. So why pay it after the balance of your loan has fallen below the 80% mark? Your neighborhood might not be heeding the national trends and/or your home might have acquired equity before things settled down, so even when nationwide trends forecast plummeting home values, you should understand that real estate is local.
A certified, licensed real estate appraiser can help homeowners understand just when their home's equity goes over the 20% point, as it's a tough thing to know. As appraisers, it's our job to recognize the market dynamics of our area. At Nordquist Appraisal LLC, we know when property values have risen or declined. We're masters at determining value trends in Pittsburgh, Allegheny County and surrounding areas. When faced with figures from an appraiser, the mortgage company will usually remove the PMI with little anxiety. At which time, the homeowner can enjoy the savings from that point on.
Want to learn more about PMI and the Homeowners Protection Act? Click this link:
Would you like to save money by not having to pay for Private Mortgage Insurance? We can help. Simply fill out the form below as completely as possible and we'll send you information on how to save PMI expenses, with no obligation to you. We guarantee your privacy.