Have equity in your home? Want a lower payment? An appraisal from Cayenne Appraisal Group, LLC can help you get rid of your PMI.When buying a house, a 20% down payment is usually the standard. The lender's only risk is often just the difference between the home value and the amount due on the loan, so the 20% supplies a nice cushion against the costs of foreclosure, selling the home again, and regular value variations on the chance that a borrower doesn't pay.The market was accepting down payments dropping to 10, 5 and even 0 percent in the peak of last decade's mortgage boom. How does a lender manage the added risk of the small down payment? The solution is Private Mortgage Insurance or PMI. This supplemental plan guards the lender in case a borrower is unable to pay on the loan and the market price of the home is less than the loan balance. Because the $40-$50 a month per $100,000 borrowed is compiled into the mortgage monthly payment and oftentimes isn't even tax deductible, PMI can be pricey to a borrower. It's lucrative for the lender because they secure the money, and they get the money if the borrower is unable to pay, different from a piggyback loan where the lender takes in all the deficits.
How can homeowners refrain from bearing the expense of PMI?The Homeowners Protection Act of 1998 obligates the lenders on nearly all loans to automatically stop the PMI when the principal balance of the loan equals 78 percent of the initial loan amount. Keen home owners can get off the hook a little early. The law states that, upon request of the homeowner, the PMI must be dropped when the principal amount reaches just 80 percent.Since it can take many years to arrive at the point where the principal is just 80% of the original amount of the loan, it's important to know how your Florida home has grown in value. After all, any appreciation you've accomplished over the years counts towards abolishing PMI. So what's the reason for paying it after your loan balance has dropped below the 80% mark? Even when nationwide trends hint at lower overall home values, be aware that real estate is local. Your neighborhood might not be following the national trends and/or your home may have acquired equity before things cooled off. The hardest thing for many homeowners to determine is whether their home equity has exceeded the 20% point. An accredited, Florida licensed real estate appraiser can certainly help. Market dynamics and neighborhood-specific pricing trends are an appraiser's primary job! At Cayenne Appraisal Group, LLC, we're experts at pinpointing value trends in Tampa, Mecklenburg County, and surrounding areas, and we know when property values have risen or declined. When faced with figures from an appraiser, the mortgage company will often eliminate 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: Cancellation of Private Mortgage Insurance: Federal Law May Save You Hundreds of Dollars Each Year
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