Have equity in your home? Want a lower payment? An appraisal from Munding Appraisal can help you get rid of your PMI.A 20% down payment is typically accepted when getting a mortgage. The lender's liability is oftentimes only the difference between the home value and the amount outstanding on the loan, so the 20% supplies a nice buffer against the expenses of foreclosure, selling the home again, and natural value fluctuations on the chance that a borrower defaults.The market was accepting down payments as low as 10, 5 and often 0 percent during the mortgage boom of the last decade. How does a lender endure the additional risk of the small down payment? The answer is Private Mortgage Insurance or PMI. PMI protects the lender in case a borrower doesn't pay on the loan and the market price of the home is lower than what the borrower still owes on the loan. PMI is costly to a borrower because the $40-$50 a month per $100,000 borrowed is lumped into the mortgage monthly payment and often isn't even tax deductible. It's lucrative for the lender because they secure the money, and they get the money if the borrower defaults, separate from a piggyback loan where the lender absorbs all the deficits.
How can homebuyers keep from bearing the expense of PMI?With the passage of The Homeowners Protection Act of 1998, lenders are obligated to automatically cease the PMI when the principal balance of the loan equals 78 percent of the beginning loan amount on nearly all loans. The law states that, at the request of the homeowner, the PMI must be dropped when the principal amount equals just 80 percent. So, acute home owners can get off the hook a little early.Considering it can take many years to reach the point where the principal is just 80% of the initial amount borrowed, it's essential to know how your Oklahoma home has increased in value. After all, all of the appreciation you've accomplished over the years counts towards removing PMI. So why should you pay it after your loan balance has dropped below the 80% threshold? Your neighborhood may not conform to national trends and/or your home may have acquired equity before things simmered down. So even when nationwide trends signify decreasing home values, you should realize that real estate is local. A certified, Oklahoma licensed real estate appraiser can help homeowners 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 Munding Appraisal, we know when property values have risen or declined. We're masters at recognizing value trends in Oklahoma City, Oklahoma County, and surrounding areas. Faced with information from an appraiser, the mortgage company will usually eliminate the PMI with little trouble. At that time, the home owner 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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