Have equity in your home? Want a lower payment? An appraisal from Wicomico Appraisals, LLC can help you get rid of your PMI.A 20% down payment is usually the standard when getting a mortgage. The lender's only liability is typically just the remainder between the home value and the balance remaining on the loan, so the 20% adds a nice buffer against the charges of foreclosure, selling the home again, and natural value variations on the chance that a purchaser doesn't pay.During the recent mortgage boom of the last decade, it became customary to see lenders only asking for down payments of 10, 5, 3 or even 0 percent. A lender is able to handle the additional risk of the minimal down payment with Private Mortgage Insurance or PMI. PMI guards the lender in the event a borrower is unable to pay on the loan and the value of the property is lower than the balance of the loan. Because the $40-$50 a month per $100,000 borrowed is lumped into the mortgage payment and oftentimes isn't even tax deductible, PMI is pricey to a borrower. As opposed to a piggyback loan where the lender consumes all the deficits, PMI is favorable for the lender because they acquire the money, and they are covered if the borrower defaults.
How homebuyers can prevent bearing the expense of PMIWith the passage of The Homeowners Protection Act of 1998, lenders are forced to automatically cancel the PMI when the principal balance of the loan reaches 78 percent of the beginning loan amount on nearly all loans. Smart homeowners can get off the hook ahead of time. The law states that, upon request of the homeowner, the PMI must be released when the principal amount equals only 80 percent.It can take many years to get to the point where the principal is only 80% of the initial amount of the loan, so it's essential to know how your Maryland home has appreciated in value. After all, all of the appreciation you've obtained over time counts towards abolishing PMI. So why pay it after the balance of your loan has dropped below the 80% threshold? Your neighborhood might not follow national trends and/or your home may have gained equity before things simmered down. So even when nationwide trends hint at declining home values, you should understand that real estate is local. The toughest thing for most consumers to determine is whether their home equity has exceeded the 20% point. A certified, Maryland licensed real estate appraiser can certainly help. As appraisers, it's our job to keep up with the market dynamics of our area. At Wicomico Appraisals, LLC, we know when property values have risen or declined. We're experts at recognizing value trends in Clements, Saint Marys County, and surrounding areas. Faced with figures from an appraiser, the mortgage company will generally do away with the PMI with little effort. 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: Cancellation of Private Mortgage Insurance: Federal Law May Save You Hundreds of Dollars Each Year
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