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Let AppraiserJoe.com help you learn if you can get rid of your PMI
A 20% down payment is typically accepted when getting a mortgage.
The lender's risk is often only the remainder between the home value and the sum due on the loan, so the 20% supplies a nice buffer against the charges of foreclosure, reselling the home, and regular value changes on the chance that a purchaser is unable to pay.
The market was taking down payments as low as 10, 5 and often 0 percent in the peak of last decade's mortgage boom.
A lender is able to handle the added risk of the reduced down payment with Private Mortgage Insurance or PMI.
PMI covers the lender in case a borrower doesn't pay on the loan and the market price of the home is less than what the borrower still owes on the loan.
PMI is pricey to a borrower in that the $40-$50 a month per $100,000 borrowed is bundled into the mortgage payment and oftentimes isn't even tax deductible.
It's lucrative for the lender because they secure the money, and they are covered if the borrower is unable to pay, different from a piggyback loan where the lender consumes all the deficits.
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The money you keep from dropping the PMI required when you got your mortgage pays for the appraisal in a matter of months. Nobody is more qualified than AppraiserJoe.com when it comes to appreciating values in the city of Portage and Porter County. Contact us today.
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How can a homeowner refrain from paying PMI?
The Homeowners Protection Act of 1998 forces the lenders on most loans to automatically cease the PMI when the principal balance of the loan reaches 78 percent of the original loan amount.
Wise home owners can get off the hook a little earlier. The law states that, at the request of the homeowner, the PMI must be dropped when the principal amount reaches only 80 percent.
Considering it can take many years to reach the point where the principal is only 80% of the initial amount borrowed, it's important to know how your Indiana home has appreciated in value.
After all, every bit of appreciation you've acquired over time counts towards abolishing PMI. So why pay it after the balance of your loan has dropped below the 80% threshold?
Even when nationwide trends indicate declining home values, be aware that real estate is local. Your neighborhood might not be adopting the national trends and/or your home could have secured equity before things cooled off.
The difficult thing for many homeowners to figure out is just when their home's equity rises above the 20% point. A certified, Indiana licensed real estate appraiser can certainly help.
Market dynamics and neighborhood-specific pricing trends are an appraiser's primary job!
At AppraiserJoe.com, we know when property values have risen or declined. We're experts at analyzing value trends in Portage, Porter County, and surrounding areas.
When faced with data from an appraiser, the mortgage company will most often do away with the PMI with little effort. At which time, the homeowner can enjoy the savings from that point on.
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Did you secure your mortgage with less than 20% down? Contact AppraiserJoe.com today at (219) 595-2595 to see if you can get rid of 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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