Have equity in your home? Want a lower payment? An appraisal from US Real Estate Valuation Solutions can help you get rid of your PMI.When purchasing a home, a 20% down payment is typically the standard. Since the liability for the lender is generally only the remainder between the home value and the amount outstanding on the loan, the 20% adds a nice buffer against the costs of foreclosure, selling the home again, and regular value fluctuations on the chance that a purchaser doesn't pay.The market was taking down payments as low as 10, 5 and even 0 percent in the peak of last decade's mortgage boom. How does a lender handle the increased risk of the low down payment? The solution is Private Mortgage Insurance or PMI. This added plan guards the lender in the event a borrower doesn't pay on the loan and the value of the home is less than what is owed on the loan. Since the $40-$50 a month per $100,000 borrowed is compiled into the mortgage payment and on many occasions isn't even tax deductible, PMI can be expensive to a borrower. It's money-making for the lender because they acquire the money, and they receive payment if the borrower defaults, separate from a piggyback loan where the lender takes in all the losses.
How can home owners prevent paying PMI?As a result of The Homeowners Protection Act of 1998, lenders are forced to automatically stop the PMI when the principal balance of the loan reaches 78 percent of the primary loan amount on most loans. The law designates that, at the request of the homeowner, the PMI must be released when the principal amount equals just 80 percent. So, savvy 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 original amount of the loan, it's essential to know how your California home has appreciated in value. After all, all of the appreciation you've gained over the years counts towards removing PMI. So why pay it after your loan balance has fallen below the 80% threshold? Your neighborhood may not conform to national trends and/or your home might have secured equity before things simmered down. So even when nationwide trends predict declining home values, you should realize that real estate is local. The difficult thing for many consumers to determine is whether their home equity has exceeded the 20% point. An accredited, California licensed real estate appraiser can definitely help. As appraisers, it's our job to understand the market dynamics of our area. At US Real Estate Valuation Solutions, we know when property values have risen or declined. We're experts at pinpointing value trends in Roseville, Placer County, and surrounding areas. Faced with information from an appraiser, the mortgage company will often cancel the PMI with little anxiety. At that time, the home owner can delight in 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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