Let Frezno Appraisal Group help you learn if you can cancel your PMIWhen purchasing a home, a 20% down payment is typically the standard. Because the liability for the lender is often only the difference between the home value and the sum due on the loan, the 20% provides a nice cushion against the expenses of foreclosure, reselling the home, and typical value fluctuations in the event a borrower defaults.Banks were working with down payments discounted to 10, 5 and even 0 percent during the mortgage boom of the mid 2000s. A lender is able to endure the additional risk of the minimal down payment with Private Mortgage Insurance or PMI. This added policy protects the lender in case a borrower defaults on the loan and the market price of the house is less than the loan balance. PMI is costly to a borrower because the $40-$50 a month per $100,000 borrowed is lumped into the mortgage payment and on many occasions isn't even tax deductible. It's lucrative for the lender because they secure the money, and they receive payment if the borrower is unable to pay, in contrast to a piggyback loan where the lender absorbs all the costs.
How buyers can prevent bearing the cost of PMIThe Homeowners Protection Act of 1998 makes the lenders on the majority of loans to automatically cancel the PMI when the principal balance of the loan equals 78 percent of the primary loan amount. Keen home owners can get off the hook beforehand. The law promises that, upon request of the homeowner, the PMI must be released when the principal amount reaches only 80 percent.It can take many years to get to the point where the principal is just 80% of the original amount borrowed, so it's essential to know how your California home has grown in value. After all, any appreciation you've acquired over the years counts towards dismissing PMI. So what's the reason for paying it after the balance of your loan has dropped below the 80% mark? Your neighborhood might not conform to national trends and/or your home could have secured equity before things declined. So even when nationwide trends hint at falling home values, you should realize that real estate is local. The toughest thing for almost all homeowners to determine is just when their home's equity goes over the 20% point. A certified, California licensed real estate appraiser can definitely help. Market dynamics and neighborhood-specific pricing trends are an appraiser's primary job! At Frezno Appraisal Group, we know when property values have risen or declined. We're masters at recognizing value trends in Frezno, Fresno County, and surrounding areas. When faced with figures from an appraiser, the mortgage company will usually do away with the PMI with little trouble. At that time, the homeowner can delight in 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
|
||||||||||||||||||
