Town and Country Appraisals LLC can help you remove your Private Mortgage InsuranceIt's generally inferred that a 20% down payment is common when buying a house. Considering the liability for the lender is often only the remainder 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 variations in the event a borrower defaults.During the recent mortgage boom that our country recently experienced, it became common to see lenders only asking for down payments of 10, 5, 3 or often 0 percent. A lender is able to handle the additional risk of the small down payment with Private Mortgage Insurance or PMI. PMI takes care of the lender in case a borrower defaults on the loan and the market price of the house is lower than what the borrower still owes on the loan. Since the $40-$50 a month per $100,000 borrowed is rolled into the mortgage monthly payment and many times isn't even tax deductible, PMI can be costly to a borrower. Unlike a piggyback loan where the lender takes in all the costs, PMI is profitable for the lender because they collect the money, and they get paid if the borrower defaults.
How homebuyers can refrain from paying PMIWith the implementation of The Homeowners Protection Act of 1998, lenders are obligated to automatically eliminate the PMI when the principal balance of the loan equals 78 percent of the initial loan amount on most loans. Savvy home owners can get off the hook beforehand. The law stipulates that, upon request of the home owner, the PMI must be released when the principal amount reaches only 80 percent.Since it can take several years to arrive at the point where the principal is just 80% of the original amount of the loan, it's essential to know how your Florida home has grown in value. After all, every bit of 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% threshold? Your neighborhood might not conform to national trends and/or your home might have gained equity before the economy simmered down. So even when nationwide trends predict declining home values, you should understand that real estate is local. A certified, Florida licensed real estate appraiser can help homeowners figure out just when their home's equity rises above the 20% point, as it's a hard thing to know. Market dynamics and neighborhood-specific pricing trends are an appraiser's primary job! At Town and Country Appraisals LLC, we know when property values have risen or declined. We're experts at analyzing value trends in Clermont, Lake County, and surrounding areas. Faced with information from an appraiser, the mortgage company will usually remove the PMI with little trouble. At that time, the home owner can relish 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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