Golden Rule Appraisals can help you remove your Private Mortgage InsuranceA 20% down payment is usually accepted when getting a mortgage. The lender's risk is oftentimes 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 natural value changes in the event a purchaser doesn't pay. During the recent mortgage upturn of the last decade, it was customary to see lenders commanding down payments of 10, 5 or even 0 percent. How does a lender handle the added risk of the low down payment? The answer is Private Mortgage Insurance or PMI. This added policy protects the lender in case a borrower doesn't pay on the loan and the value of the property is lower than the balance of the loan. PMI is pricey to a borrower on the grounds that the $40-$50 a month per $100,000 borrowed is compiled into the mortgage monthly payment and generally isn't even tax deductible. Separate from a piggyback loan where the lender takes in all the costs, PMI is advantageous for the lender because they obtain the money, and they get the money if the borrower defaults. 
Does your monthly mortgage payment include PMI? Contact us, you may be able to save money by removing your PMI. How can home buyers prevent bearing the cost of PMI?With the implementation of The Homeowners Protection Act of 1998, on most loans lenders are obligated to automatically cancel the PMI when the principal balance of the loan reaches 78 percent of the primary loan amount. The law pledges that, upon request of the homeowner, the PMI must be dropped when the principal amount reaches only 80 percent. So, savvy home owners can get off the hook a little earlier. It can take many years to arrive at the point where the principal is only 20% of the original amount borrowed, so it's essential to know how your home has increased in value. After all, all of the appreciation you've accomplished 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 following the national trends and/or your home could have gained equity before things simmered down, so even when nationwide trends forecast falling home values, you should realize that real estate is local. A certified, licensed real estate appraiser can help homeowners understand just when their home's equity goes over 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 Golden Rule Appraisals, we know when property values have risen or declined. We're masters at recognizing value trends in Edmond, Oklahoma County and surrounding areas. When faced with figures from an appraiser, the mortgage company will usually remove the PMI with little anxiety. At that time, the home owner can retain the savings from that point on.
Want to learn more about PMI and the Homeowners Protection Act? Click this link: |