Let Certified Real Estate Appraisers, LLC help you discover if you can eliminate your PMIA 20% down payment is usually accepted when buying a house. Since the liability for the lender is often only the remainder between the home value and the amount due on the loan, the 20% supplies a nice buffer against the charges of foreclosure, selling the home again, and typical value variations on the chance that a purchaser is unable to pay.Lenders were taking down payments discounted to 10, 5 and even 0 percent during the mortgage boom of the last decade. How does a lender endure the additional risk of the small down payment? The solution is Private Mortgage Insurance or PMI. PMI protects the lender if a borrower defaults on the loan and the market price of the property is less than the balance of the loan. Since the $40-$50 a month per $100,000 borrowed is rolled into the mortgage payment and on many occasions isn't even tax deductible, PMI can be costly to a borrower. It's money-making for the lender because they collect the money, and they receive payment if the borrower doesn't pay, separate from a piggyback loan where the lender takes in all the costs.
How can a homeowner keep from bearing the cost of PMI?The Homeowners Protection Act of 1998 makes the lenders on most loans to automatically stop the PMI when the principal balance of the loan reaches 78 percent of the initial loan amount. The law states that, at the request of the homeowner, the PMI must be released when the principal amount reaches only 80 percent. So, acute home owners can get off the hook sooner than expected.Because it can take many years to reach the point where the principal is just 80% of the initial amount borrowed, it's important to know how your Florida home has grown in value. After all, all of the appreciation you've obtained over time counts towards removing PMI. So why should you pay it after your loan balance has dropped below the 80% threshold? Your neighborhood might not follow national trends and/or your home may have gained equity before things cooled off. So even when nationwide trends predict falling home values, you should understand that real estate is local. An accredited, Florida licensed real estate appraiser can help home owners figure out if their equity has reached the 20% point, as it's a difficult thing to know. It's an appraiser's job to understand the market dynamics of their area. At Certified Real Estate Appraisers, LLC, we know when property values have risen or declined. We're experts at identifying value trends. When faced with information from an appraiser, the mortgage company will generally drop the PMI with little trouble. At which time, the homeowner can enjoy 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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