Let Bret Mundy Real Estate LLC help you discover if you can eliminate your PMIIt's typically inferred that a 20% down payment is accepted when purchasing a home. The lender's risk is generally only the remainder between the home value and the amount remaining on the loan, so the 20% supplies a nice buffer against the expenses of foreclosure, reselling the home, and typical value variations in the event a purchaser is unable to pay. During the recent mortgage boom of the mid 2000s, it was customary to see lenders requiring down payments of 10, 5 or even 0 percent. How does a lender manage the added risk of the low down payment? The answer is Private Mortgage Insurance or PMI. This added plan protects the lender in the event a borrower doesn't pay on the loan and the market price of the property is lower than what the borrower still owes on the loan. Because the $40-$50 a month per $100,000 borrowed is compiled into the mortgage payment and many times isn't even tax deductible, PMI can be costly to a borrower. It's beneficial for the lender because they obtain the money, and they get the money if the borrower is unable to pay, contradictory to a piggyback loan where the lender consumes all the costs. 
Does your monthly mortgage payment include PMI? Contact us, you may be able to save money by removing your PMI. How homeowners can keep from paying PMIThe Homeowners Protection Act of 1998 forces the lenders on most loans to automatically eliminate the PMI when the principal balance of the loan equals 78 percent of the initial loan amount. Wise homeowners can get off the hook a little earlier. The law states that, at the request of the home owner, the PMI must be dropped when the principal amount equals just 80 percent. It can take many years to arrive at the point where the principal is just 20% of the original amount borrowed, so it's crucial to know how your home has grown in value. After all, any appreciation you've achieved over time counts towards abolishing PMI. So why pay it after your loan balance has fallen below the 80% mark? Your neighborhood may not be heeding the national trends and/or your home may have gained equity before things cooled off, so even when nationwide trends hint at declining home values, you should understand that real estate is local. The difficult thing for almost all home owners to understand is just when their home's equity rises above the 20% point. A certified, licensed real estate appraiser can definitely help. As appraisers, it's our job to know the market dynamics of our area. At Bret Mundy Real Estate LLC, we know when property values have risen or declined. We're experts at recognizing value trends in Taylorsville, Alexander County and surrounding areas. Faced with data from an appraiser, the mortgage company will generally eliminate the PMI with little anxiety. At that 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: |