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Anderson Appraisal Service can help you remove your Private Mortgage Insurance
When buying a house, a 20% down payment is usually the standard.
Considering the risk for the lender is oftentimes only the remainder between the home value and the amount remaining on the loan, the 20% adds a nice cushion against the charges of foreclosure, reselling the home, and typical value fluctuations in the event a purchaser defaults.
The market was taking down payments as low as 10, 5 and frequently 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 solution is Private Mortgage Insurance or PMI.
This supplementary policy takes care of the lender in the event a borrower is unable to pay on the loan and the market price of the house is lower than what is owed on the loan.
Because the $40-$50 a month per $100,000 borrowed is rolled into the mortgage payment and oftentimes isn't even tax deductible, PMI can be expensive to a borrower.
It's favorable for the lender because they collect the money, and they are covered if the borrower defaults, unlike a piggyback loan where the lender takes in all the costs.
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Did you secure your mortgage with less than 20% down? Contact Anderson Appraisal Service today at 4178892998 to see if you can get rid of your Private Mortgage Insurance payment.
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How buyers can prevent paying PMI
The Homeowners Protection Act of 1998 requires the lenders on the majority of loans to automatically cease the PMI when the principal balance of the loan reaches 78 percent of the beginning loan amount.
The law states that, at the request of the homeowner, the PMI must be released when the principal amount equals just 80 percent. So, savvy home owners can get off the hook a little earlier.
Considering it can take many years to get to the point where the principal is only 80% of the original loan amount, it's crucial to know how your Missouri home has grown in value.
After all, all of the appreciation you've obtained over time counts towards removing PMI. So what's the reason for paying it after your loan balance has dropped below the 80% threshold?
Your neighborhood might not conform to national trends and/or your home may have secured equity before things declined. So even when nationwide trends indicate decreasing home values, you should know most importantly that real estate is local.
An accredited, Missouri licensed real estate appraiser can help home owners figure out just when their home's equity rises above the 20% point, as it's a tough thing to know.
As appraisers, it's our job to understand the market dynamics of our area.
At Anderson Appraisal Service, we know when property values have risen or declined. We're masters at pinpointing value trends in Springfield, Greene County, and surrounding areas.
Faced with figures from an appraiser, the mortgage company will generally eliminate the PMI with little effort. At which time, the homeowner can relish the savings from that point on.
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Does your monthly mortgage payment have a lineitem for PMI? Call Anderson Appraisal Service today at 4178892998 or send us an e-mail. Documentation of your home's current value could save you thousands.
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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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