Have equity in your home? Want a lower payment? Based in Beaver County, TJ appraisals can help you get rid of your PMI.A 20% down payment is usually accepted when purchasing a home. Because the risk for the lender is often only the remainder between the home value and the sum outstanding on the loan, the 20% supplies a nice buffer against the expenses of foreclosure, selling the home again, and natural value changes in the event a purchaser doesn't pay.
During the recent mortgage boom of the mid 2000s, it was widespread to see lenders reducing down payments to 10, 5 or often 0 percent. A lender is able to endure the additional risk of the minimal down payment with Private Mortgage Insurance or PMI. PMI takes care of the lender if a borrower is unable to pay on the loan and the market price of the property is less than the loan balance.
PMI can be pricey to a borrower in that the $40-$50 a month per $100,000 borrowed is compiled into the mortgage monthly payment and frequently isn't even tax deductible. It's favorable for the lender because they obtain the money, and they get paid if the borrower is unable to pay, as opposed to a piggyback loan where the lender consumes all the damages.
How can homebuyers refrain from paying PMI?The Homeowners Protection Act of 1998 requires the lenders on the majority of loans to automatically terminate the PMI when the principal balance of the loan reaches 78 percent of the original loan amount. Acute home owners can get off the hook sooner than expected. The law states that, at the request of the home owner, the PMI must be abandoned when the principal amount equals just 80 percent.
It can take many years to arrive at the point where the principal is just 80% of the original amount borrowed, so it's necessary to know how your Pennsylvania home has increased in value. After all, all of the appreciation you've accomplished over the years counts towards abolishing PMI. So why pay it after the balance of your loan has fallen below the 80% mark? Your neighborhood may not adhere to national trends and/or your home may have secured equity before things cooled off. So even when nationwide trends predict decreasing home values, you should understand that real estate is local.
A certified, Pennsylvania licensed real estate appraiser can help homeowners figure out if their equity has exceeed 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 TJ appraisals, we know when property values have risen or declined. We're experts at identifying value trends in Beaver, Beaver County, and surrounding areas. When faced with figures from an appraiser, the mortgage company will often drop the PMI with little effort. At that time, the homeowner can delight in the savings from that point on.
Want to learn more about PMI and the Homeowners Protection Act? Click this link: