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Have equity in your home? Want a lower payment? An appraisal from Deer Creek Appraisals can help you get rid of your PMI.
A 20% down payment is typically the standard when purchasing a home.
Since the liability for the lender is usually only the remainder between the home value and the amount outstanding on the loan, the 20% adds a nice buffer against the expenses of foreclosure, reselling the home, and typical value variations on the chance that a borrower doesn't pay.
During the recent mortgage boom of the mid 2000s, it became common to see lenders making deals with down payments of 10, 5 or often 0 percent.
A lender is able to manage the increased risk of the reduced down payment with Private Mortgage Insurance or PMI.
This supplemental plan takes care of the lender in the event a borrower doesn't pay on the loan and the market price of the home is lower than the loan balance.
Since the $40-$50 a month per $100,000 borrowed is rolled into the mortgage payment and frequently isn't even tax deductible, PMI can be costly to a borrower.
It's lucrative for the lender because they acquire the money, and they get paid if the borrower defaults, separate from a piggyback loan where the lender absorbs all the deficits.
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The savings from cancelling your PMI will make up for the cost of the appraisal in a matter of months. Nobody is more qualified than Deer Creek Appraisals when it comes to appreciating values in the city of Denver and Park County. Contact us today.
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How can home buyers keep from paying PMI?
The Homeowners Protection Act of 1998 obligates the lenders on the majority of loans to automatically cease the PMI when the principal balance of the loan reaches 78 percent of the original loan amount.
The law states that, upon request of the home owner, the PMI must be dropped when the principal amount reaches only 80 percent. So, smart home owners can get off the hook ahead of time.
Since it can take a significant number of years to arrive at the point where the principal is only 80% of the initial loan amount, it's important to know how your Colorado home has increased in value.
After all, any appreciation you've accomplished over the years counts towards dismissing PMI. So why pay it after your loan balance has dropped below the 80% mark?
Even when nationwide trends forecast decreasing home values, understand that real estate is local. Your neighborhood might not be heeding the national trends and/or your home might have gained equity before things cooled off.
An accredited, Colorado 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 hard thing to know.
As appraisers, it's our job to know the market dynamics of our area.
At Deer Creek Appraisals, we know when property values have risen or declined. We're experts at identifying value trends in Denver, Park County, and surrounding areas.
When faced with information from an appraiser, the mortgage company will most often remove the PMI with little trouble. At that time, the home owner can relish the savings from that point on.
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Does your monthly loan payment include a fee for PMI? Call Deer Creek Appraisals today at 7202606214 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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