Have equity in your home? Want a lower payment? An appraisal from Tavares Appraisals can help you get rid of your PMI.When getting a mortgage, a 20% down payment is usually the standard. The lender's liability is usually only the remainder between the home value and the amount outstanding on the loan, so the 20% supplies a nice buffer against the costs of foreclosure, reselling the home, and natural value variations in the event a borrower defaults. During the recent mortgage boom of the mid 2000s, it became widespread to see lenders commanding down payments of 10, 5 or sometimes 0 percent. How does a lender endure the added risk of the small down payment? The solution is Private Mortgage Insurance or PMI. PMI protects the lender if a borrower defaults on the loan and the market price of the property is less than what is owed on the loan. Since the $40-$50 a month per $100,000 borrowed is compiled into the mortgage monthly payment and many times isn't even tax deductible, PMI can be pricey to a borrower. Opposite from a piggyback loan where the lender takes in all the damages, PMI is beneficial for the lender because they obtain the money, and they get paid if the borrower doesn't pay. 
Does your monthly mortgage payment include PMI? Contact us, you may be able to save money by removing your PMI. How can homebuyers refrain from paying PMI?The Homeowners Protection Act of 1998 forces the lenders on nearly all loans to automatically terminate the PMI when the principal balance of the loan reaches 78 percent of the original loan amount. Keen home owners can get off the hook a little early. The law promises that, at the request of the homeowner, the PMI must be released when the principal amount reaches only 80 percent. It can take countless years to arrive at the point where the principal is just 20% of the initial loan amount, so it's crucial to know how your home has increased in value. After all, every bit of appreciation you've acquired over time counts towards removing PMI. So what's the reason for paying it after your loan balance has fallen below the 80% threshold? Even when nationwide trends predict plunging home values, understand that real estate is local. Your neighborhood might not be adopting the national trends and/or your home may have acquired equity before things simmered down. A certified, licensed real estate appraiser can help home owners understand just when their home's equity goes over the 20% point, as it's a hard thing to know. It's an appraiser's job to understand the market dynamics of their area. At Tavares Appraisals, we know when property values have risen or declined. We're experts at pinpointing value trends in Fremont, Alameda County and surrounding areas. When faced with figures from an appraiser, the mortgage company will usually eliminate the PMI with little anxiety. 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: |