Have equity in your home? Want a lower payment? An appraisal from Champ Rock Appraisals, LLC can help you get rid of your PMI.It's typically inferred that a 20% down payment is accepted when getting a mortgage. The lender's risk is oftentimes only the difference between the home value and the balance outstanding on the loan, so the 20% supplies a nice cushion against the costs of foreclosure, reselling the home, and typical value fluctuations on the chance that a borrower defaults.
The market was taking down payments dropping to 10, 5 and even 0 percent during the mortgage boom of the mid 2000s. How does a lender handle the added risk of the small down payment? The answer is Private Mortgage Insurance or PMI. PMI takes care of the lender in case a borrower is unable to pay on the loan and the market price of the house is less than what the borrower still owes on the loan.
PMI is costly to a borrower on the grounds that the $40-$50 a month per $100,000 borrowed is compiled into the mortgage payment and many times isn't even tax deductible. It's lucrative for the lender because they acquire the money, and they get the money if the borrower is unable to pay, as opposed to a piggyback loan where the lender absorbs all the deficits.
How home owners can refrain from paying PMIWith the implementation of The Homeowners Protection Act of 1998, lenders are required to automatically eliminate the PMI when the principal balance of the loan reaches 78 percent of the initial loan amount on nearly all loans. Savvy home owners can get off the hook a little earlier. The law stipulates that, upon request of the home owner, the PMI must be dropped when the principal amount reaches only 80 percent.
Because it can take a significant number of years to arrive at the point where the principal is only 80% of the original loan amount, it's essential to know how your West Virginia home has increased in value. After all, all of the appreciation you've acquired over the years counts towards removing PMI. So why pay it after the balance of your loan has fallen below the 80% mark? Even when nationwide trends predict decreasing home values, realize that real estate is local. Your neighborhood might not be reflecting the national trends and/or your home may have gained equity before things declined.
The difficult thing for almost all people to determine is whether their home equity has exceeded the 20% point. A certified, West Virginia licensed real estate appraiser can surely help. Market dynamics and neighborhood-specific pricing trends are an appraiser's primary job! At Champ Rock Appraisals, LLC, we're experts at recognizing value trends in Seneca Rocks, Pendleton County, and surrounding areas, and we know when property values have risen or declined. When faced with information from an appraiser, the mortgage company will most often cancel the PMI with little anxiety. At which time, the home owner can relish the savings from that point on.
Want to learn more about PMI and the Homeowners Protection Act? Click this link: