Deer Creek Appraisals can help you remove your Private Mortgage Insurance
It's generally known that a 20% down payment is the standard when getting a mortgage. The lender's risk is often only the remainder between the home value and the sum due on the loan, so the 20% provides a nice cushion against the charges of foreclosure, selling the home again, and typical value variations on the chance that a purchaser defaults.
Banks were accepting down payments down to 10, 5 and even 0 percent in the peak of last decade's mortgage boom. A lender is able to handle the increased risk of the small down payment with Private Mortgage Insurance or PMI. PMI takes care of the lender in case a borrower is unable to pay on the loan and the value of the house is less than what is owed 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 is pricey to a borrower. It's advantageous for the lender because they secure the money, and they receive payment if the borrower doesn't pay, opposite from a piggyback loan where the lender absorbs all the damages.
Does your monthly mortgage payment include PMI? Contact us, you may be able to save money by removing your PMI.
How home owners can keep from bearing the cost of PMI
The Homeowners Protection Act of 1998 forces the lenders on most loans to automatically terminate 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 home owner, the PMI must be abandoned when the principal amount reaches only 80 percent. So, acute home owners can get off the hook a little early.
It can take many years to arrive at the point where the principal is only 20% of the initial loan amount, so it's important to know how your home has grown in value. After all, any appreciation you've accomplished over the years counts towards dismissing PMI. So why pay it after the balance of your loan has dropped below the 80% threshold? Even when nationwide trends signify decreasing home values, understand that real estate is local. Your neighborhood may not be minding the national trends and/or your home may have acquired equity before things settled down.
An accredited, licensed real estate appraiser can help homeowners understand just when their home's equity goes over the 20% point, as it's a difficult thing to know. It's an appraiser's job to know the market dynamics of their area. At Deer Creek Appraisals, we know when property values have risen or declined. We're masters at determining value trends in Denver, Jefferson County and surrounding areas. Faced with information from an appraiser, the mortgage company will usually eliminate the PMI with little effort. 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: