Let Rabin Appraisal Associates 847-337-5787 help you determine if you can cancel your PMIWhen purchasing a home, a 20% down payment is typically the standard. Since the risk for the lender is oftentimes only the remainder between the home value and the sum due on the loan, the 20% provides a nice buffer against the costs of foreclosure, selling the home again, and regular value changeson the chance that a borrower defaults. Banks were working with down payments down to 10, 5 and even 0 percent in the peak of last decade's mortgage boom. How does a lender endure the added risk of the small down payment? The answer is Private Mortgage Insurance or PMI. PMI takes care of the lender in the event a borrower doesn't pay on the loan and the market price of the house is lower than the balance of the loan. PMI can be expensive to a borrower in that the $40-$50 a month per $100,000 borrowed is rolled into the mortgage payment and many times isn't even tax deductible. It's profitable for the lender because they collect the money, and they get paid if the borrower doesn't pay, contradictory to a piggyback loan where the lender consumes all the losses. ![]() Does your monthly mortgage payment include PMI? Contact us, you may be able to save money by removing your PMI. How home buyers can keep from paying PMIWith the implementation of The Homeowners Protection Act of 1998, on nearly all loans lenders are obligated to automatically cease the PMI when the principal balance of the loan equals 78 percent of the original loan amount. Wise home owners can get off the hook sooner than expected. The law promises that, upon request of the home owner, the PMI must be dropped when the principal amount reaches just 80 percent. It can take countless years to get to the point where the principal is only 20% of the initial amount of the loan, so it's crucial to know how your home has grown in value. After all, every bit of appreciation you've acquired over the years counts towards dismissing PMI. So what's the reason for paying it after your loan balance has fallen below the 80% mark? Even when nationwide trends hint at falling home values, understand that real estate is local. Your neighborhood might not be adhering to the national trends and/or your home could have secured equity before things settled down. The hardest thing for almost all homeowners to understand is just when their home's equity rises above the 20% point. A certified, licensed real estate appraiser can surely help. It's an appraiser's job to understand the market dynamics of their area. At Rabin Appraisal Associates 847-337-5787, we know when property values have risen or declined. We're experts at analyzing value trends in Gurnee, Lake County and surrounding areas. Faced with figures from an appraiser, the mortgage company will most often remove the PMI with little trouble. At that time, the home owner can delight in the savings from that point on.
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